Anderson's Pty Ltd v Victoria

[1964] HCA 77
111 CLR 353

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(Judgment by: Kitto J)

Anderson's Pty Ltd
vVictoria

Court:

Judges: Barwick CJ
Mctiernan J

Kitto JTaylor J
Menzies J
Windeyr J
Owen J

Legislative References:
Stamps Act 1958 (Victoria) - subdiv (14) of Div 3 of Pt II

Case References:
Bolton v Madsen (1963) - 110 CLR 264
Parton v Milk Board (Vic) - (1949) 80 CLR 229
Dennis Hotels Pty Ltd v Victoria - (1960) 104 CLR 529
Matthews v Chicory Marketing Board (Vic) - (1938) 60 CLR 263
Peterswald v Bartley - (1904) 1 CLR 497
Browns Transport Pty Ltd v Kropp - (1958) 100 CLR 117
Bank of Toronto v Lambe - (1887) 12 App Cas 575

Hearing date: 9, 12 and 13 October 1964
Judgment date: 17 December 1964

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Judgment by:
Kitto J

In five actions in this Court against the State of Victoria and the Minister of that State administering the Stamps Act 1958 (Vic) as amended, the question is raised by demurrer to the respective statements of claim whether ss 131B, 131C and 131E of the Act are ultra vires the Parliament of Victoria, either generally or insofar as they apply to certain kinds of agreements into which the plaintiffs enter in the course of their businesses. The ground of the attack upon the sections is that they purport to impose exactions which, either in all cases or at least in some in which the plaintiffs are concerned, are duties of excise, and as such are excluded from the legislative power of the States by s 90 of the Constitution.

The sections thus impugned are in subdiv (14) of Div 3 of the Act, a subdivision which, as its heading shows, relates to the imposition of a stamp duty on "Instalment Purchase Agreements". That expression is defined by s 131A to mean a credit purchase agreement, a hire-purchase agreement, or a rental agreement. Each of these expressions is in its turn the subject of a definition. The precise terms of the definitions need to be carefully noticed, for the nature of a duty imposed upon instruments of defined classes must necessarily depend very much upon the tests prescribed for inclusion in those classes.

A "credit purchase agreement" means, subject to two exclusions which I shall mention in a moment, an agreement for the purchase of goods under which, irrespective of the time at which the property in the goods passes or is to pass to the purchaser, the purchase price or any part thereof is paid or payable by a number of instalments (not being less than six) which are to be paid over a period of not less than six months, and under which any of the instalments are to be paid after the goods have been delivered to the purchaser, and whether such instalments are paid or payable by cash, or by cheque, bill of exchange or promissory note payable on demand or otherwise. The first exclusion is of any agreement for the purchase of goods together with (i) real property, (ii) any estate or interest in real property or (iii) any business or interest in a business. The second is of any agreement under which the purchaser is a person who is engaged in the trade or business of selling goods of the same nature or description as the goods to which the agreement relates. Thus to be within this definition an agreement must not only provide for the delivery of goods to a purchaser who, in effect, is in the position of a consumer and also for the passing of the property therein to him but, in addition, must provide for his making payments to the vendor on account of the purchase price after the goods have been delivered.

The expression "hire-purchase agreement" is similarly confined to an agreement with a person who (broadly speaking) is a consumer. Subject to that, it is defined to mean an agreement for the bailment of goods under which the bailee may buy goods, or under which the property in the goods may pass to the bailee, or under which any provision for credit of payments is made in the event of a subsequent purchase of the goods. There is added a provision that where by virtue of two or more agreements (none of which itself constitutes a hire-purchase agreement) there is such a bailment of goods the agreements shall be treated as a single agreement. The point to notice here is that to be within this definition an agreement must both entitle a person to the possession of goods and also make provision (necessarily including financial provision) in respect of his possibly acquiring them subsequently. (The definition does not mention any payment to be made in the case of an agreement "under which the property in the goods may pass to the bailee", but unless an amount is payable no duty is chargeable. This will appear from the schedule and the definition of "purchase price", which will be referred to later.)

The expression "rental agreement" is defined to mean an agreement for the bailment of goods under which the bailee may, after a specified number of instalments of rent (not being less than two instalments) have been paid in respect thereof, continue the bailment, or from time to time renew it, at a nominal rent or without further payment or on the payment of a nominal periodical or other amount. Here, again, it is to be noticed that to be within the definition an agreement must give a person the possession of goods and provide for his subsequently paying money -- in this instance as a condition of being entitled to continue in possession of them.

The first of the sections which the plaintiffs attack as imposing a duty of excise, s 131B, provides in subs (1), subject to the subdivision and to the exemptions in the schedule, that there shall be charged and paid for the use of Her Majesty upon every instrument of instalment purchase relating to any instalment purchase agreement the duty specified in a schedule under the heading "Instalment Purchase Agreement". The duty there specified is a pro rata duty in relation to the amount of the "purchase price", but subject to an exemption of any instalment purchase agreement when the "purchase price" is less than £10. (There is another exemption but it is immaterial.) "Purchase price" has a special meaning by reason of a definition in s 131A, which itself needs to be read in the light of definitions of the expressions "vendor" and "purchaser". These words mean respectively the person by whom and the person to whom goods are bailed or sold or agreed to be bailed or sold under an instalment purchase agreement. "Purchase price" is defined to mean (a) in the case of a credit purchase agreement or a hire-purchase agreement, the total amount payable under the agreement by the purchaser on any account whatsoever in respect of the goods the subject matter of the agreement, less the amount of the deposit or other money or consideration paid or given to the vendor at or before the making of the agreement and less the total amount payable under the agreement for or by way of interest or insurance or other charge; and (b) in the case of a rental agreement, the price at which the goods the subject-matter of the agreement might have been purchased for cash at the time of entering into the rental agreement.

Subs (2) of s 131B goes on to provide that the duty shall be denoted by an adhesive stamp and be paid by the vendor, or if he is not bound by the Act, then by the purchaser. This is qualified by the second of the sections under attack, s 131C, which applies to a person carrying on business as a vendor of goods under instalment purchase agreements, if the Governor in Council declares him to be an approved vendor. Such a person is relieved by s 131C from liability to pay the duty by means of adhesive stamps, but instead is made liable to pay it on a monthly statement of all instalment purchase agreements entered into by him during the last preceding month.

The expression "instrument of instalment purchase", as used in s 131B, is not defined, but its meaning is made apparent by the third of the challenged sections, s 131E. That section requires that the "vendor" of any goods under an instalment purchase agreement shall, where the purchase price is not less than £10, at or before the time of the making of the agreement, prepare an original instrument in relation to the agreement. The original agreement, if the instalment purchase agreement is in writing, is to be the agreement as in the writing; in any other case it is to be a memorandum in writing of the agreement prepared in accordance with certain specified requirements. Thus the Act ensures that the duty, though it is imposed as a stamp duty on an instrument, will become payable whenever an instalment purchase agreement is made, unless of course one of the exemptions applies.

One more provision of the Act may be mentioned, though I do not myself think that it has any real bearing on the case. S 131D makes it an offence for the vendor or other person to add the amount of any duty or any part of the duty payable by the vendor to any amount payable by the purchaser of any goods (whether under the agreement or otherwise) or otherwise to demand or recover or seek to recover any such amount from the purchaser.

The statements of claim contain allegations to the effect that the respective plaintiffs in the course of their business enter into agreements of various kinds, each falling within the definition of instalment purchase agreement in s 131A, in respect of (inter alia) new goods manufactured in Australia. Further allegations may be condensed by saying that each of the transactions effectuated by the plaintiffs' agreements relating to goods of that description is a transaction by which the goods reach the hands of a consumer. The plaintiffs' contention on the demurrer is that if they sustain these allegations at the trial they will be entitled to a declaration that ss 131B, 131C and 131E are invalid as purporting to impose duties of excise, at least insofar as those sections apply to instalment purchase agreements relating to new goods manufactured in Australia.

It is now established, as the Court said in Bolton v Madsen (1963) 110 CLR 264, at p 271, that for constitutional purposes duties of excise are taxes directly related to goods (ie goods originating in Australia), imposed at some step in their production or distribution before they reach the hands of consumers. This does not exclude a tax imposed, as is the duty now in question, upon the final step in distribution, by which goods reach the hands of consumers. The crucial question in the case of such a tax is whether it is "directly related to goods", in the sense in which that and similar expressions, such as "upon" goods, are used in the lengthening line of judgments which have been delivered in this Court upon the subject. What is referred to may, I think, be described as a relation consisting in this, that some conduct is selected by the relevant legislation as being a step in the production, manufacture or distribution of goods and in that character is made of the essence of the tax. A tax must necessarily be made payable by a person; but it is not a duty of excise unless the criterion of the person's liability is the fact that some act of his possesses the quality of a contribution either to the physical character of goods as subjects of commerce or to the sequence of events which results in their being available, as in the hands of a consumer, to be put to their ultimate purpose. The reason is that a duty of excise is, at bottom, a burden upon home production or manufacture. Obviously it is such a burden if it is payable upon a step in production or manufacture in its character of such a step. Not so obviously but just as certainly, it is such a burden if it is payable upon a step in distribution in its character of such a step; for in that case from the time the goods come into existence the law makes it inherent in their nature, as goods requiring distribution in order to become available to fulfil their purpose, that the tax shall be paid. This is the point that Rich and Williams JJ made by saying in Parton v Milk Board (Vic) (1949) 80 CLR 229, at p 252, that to be an excise duty a tax must be imposed "so as to be a method of taxing the production or manufacture of goods". At whatever point before consumption a duty of excise becomes payable it must burden production or manufacture. Their Honours went on immediately to say that the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected or intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer. This statement may need modification or explanation in the light of subsequent judgments, but it directs attention to the point that must be kept in mind in the present case, namely that a tax cannot be an excise unless its fundamental concern is with goods rather than persons. Its probable ultimate incidence is relevant for consideration simply because if the consumer is likely to bear the tax in the end that fact tends to show that the tax is in its nature a tax upon the goods and not upon the particular person who is made liable for payment of it to the Crown. In other words the tax reflects back upon the production or manufacture of the goods, since its effect is that from the beginning the goods are subjected to an inherent inability to reach the point of consumption without the duty becoming payable and so entering into their total cost. As Dixon J said in Parton v Milk Board (Vic) (1949) 80 CLR 229, at p 260, "A tax upon a commodity at any point in the course of distribution before it reaches the consumer produces the same effect as a tax upon its manufacture or production."

Where a tax is made payable in respect of a transaction which not only affects the ownership or possession of goods but also creates or regulates rights and obligations as between the immediate parties concerning collateral matters such as the payment of moneys, a particular problem in the application of these principles arises. For while the instrument effectuates a single though complex transaction, the tax upon it may be found, when the relevant legislation is examined, to relate in essence not to the nature of the goods or to any effect which the transaction has upon them, but to the nature of the provisions which deal with the collateral matters. The contention of the plaintiffs in the present case, that a stamp duty upon an instalment purchase agreement is an excise duty because the agreement takes a step in the distribution of goods, is fallacious because it fails to recognize, and consequently obscures, the crucial distinction. It overlooks the fact that such an agreement has an operation beyond and apart from that of taking a step in distribution, and that therefore the question whether a tax upon it is a duty of excise depends upon whether the tax is not only upon an agreement which in fact takes such a step but upon an agreement in respect of its taking such a step -- that is to say whether it is a tax upon the taking of the step: see the formulation which I suggested in Dennis Hotels Pty Ltd v Victoria (1960) 104 CLR 529, at p 559, approved in Bolton v Madsen (1963) 110 CLR 264, at p 273. The stamp duty here in question is not imposed upon the whole genus of agreements for purchase by or bailment to consumers. It is imposed upon a particular species only of such agreements, namely those which, having provided for the purchase or bailment, go on to create rights and obligations between the parties in relation to payments to be made after the delivery of the goods. In argument the duty was described as relating to the credit element in the transaction. The description may be accepted as making the point, succinctly if not with complete accuracy, that what gives an agreement for a bailment or for a purchase the character that attracts the duty is to be found not in the provisions that take a step in the distribution of the goods, ie the provisions for bailment or for purchase -- not in anything that it does concerning the goods -- but in the special nature of provisions it contains in respect of the future rights and obligations of the particular parties inter se as to the payment of money. The duty therefore cannot be described as producing "the same effect as a tax upon manufacture or production": it is not by its nature a burden upon production or manufacture. In essence it is a tax not "upon" goods, nor "directly related to goods". On the contrary, it is a tax upon the individual who is made liable to pay it, and its direct relation is to his entering into a financial arrangement of a particular kind.

For these reasons I am of opinion that the stamp duty provided for by ss 131B, 131C and 131E is not a duty of excise, even in respect of instalment purchase agreements relating to new goods manufactured in Australia. I would therefore uphold the demurrers, and give judgment for the defendants with respect to the whole action under O 26, r 13 of the High Court Rules.