R v The Bullfinch Prop ((WA)) Ltd

15 CLR 443
18 ALR 567

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(Judgment by: Griffith CJ.)

R
v The Bullfinch Prop ((WA)) Ltd

Court:

Judges:
Griffith CJBarton J
Higgins JJ

Judgment date: 29 October 1912

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Judgment by:
Griffith CJ.

The question for determination in this case is the amount of stamp duty payable for the transfer of some gold-mining leases in Western Australia, in pursuance of an agreement dated 2nd November, 1910, by which certain persons, called the vendors, agreed to sell the leases to the Bullfinch Prop. (WA) Ltd. By the agreement it was stipulated that the consideration for the sale should be £400,000, whereof the sum of £300,000 was to be paid and satisfied by the allotment and issue to the vendors, or as they might direct, of 300,000 fully paid-up shares of £1 in the capital of the Company, which were to be numbered so as to distinguish them from other shares. The balance of the purchase money, £100,000, was to be paid in cash upon completion of the transfer and registration of the assignment of the leases to the Company. The vendors agreed contemporaneously therewith to apply for 100,000 shares in the original capital of the Company, and to pay for the same on application in full. By the Western Australian "Stamp Act 1882," the stamp duty payable upon a "conveyance or transfer upon sale" of any property is ad valorem according to the amount or value of the consideration for the sale. The transfer in this case expressed as the consideration the sum of £400,000, but the officer to whom it was presented for registration objected that that was not the true consideration, and required the transfer to be stamped with duty as for a consideration exceeding £800,000. There is no doubt that the transfer was a conveyance or transfer upon sale of property within the meaning of the Act.

s 46 of the Act provides --

Where the consideration or any part of the consideration for a conveyance on sale consists of any stock or marketable security such conveyance is to be charged with ad valorem duty in respect of the value of such stock or security.

The first question raised is whether the consideration, or any part of it, consists of stock. On the face of the transfer, as on the face of the agreement -- as I construe it -- the consideration is expressed to be £400,000, and although the agreement goes on to explain how the £400,000 is to be paid or satisfied, that does not alter the consideration. In the case of The Commissioner for Stamp Duties v The Broken Hill South Extended Ltd, which was decided last year by the Judicial Committee of the Privy Council, [1911] AC 439 at pp 448, 449, Lord Macnaghten, who delivered the opinion of the Board, said --

Probably no difficulty would have occurred to anybody, if the agreement between the two Companies had been in a form which is not uncommon, namely, in the form of an agreement to the effect that the purchasing Company should buy the property and assets of the selling Company for so much cash, to be satisfied as to so much by the issue of shares fully paid, and as to so much by the issue of shares partly paid up. That,

he said, "is the real contract written large and stated fully and truly."

In that case, the cash price was not mentioned, but the consideration was expressed to be the issue of shares of a nominal amount. It would not, perhaps, be right to take that dictum as an absolute decision, that in a transaction of this sort consideration must necessarily be taken to be the sum mentioned, but it is a strong expression of opinion, and, if I may say so, is a common-sense way of looking at the matter. I do not think it necessary, however, to rely upon it as being ground for deciding this case, although if it were necessary I should be disposed to follow it.

Assuming then that part of the consideration for this transfer was stock, the duty is to be assessed according to the amount or value of the consideration for the sale. What, then, is the value of the "consideration for the sale?" A sale is always effected by a contract for valuable consideration. The vendor is willing to part with his property for something which he receives in return, which is called his consideration, and which the purchaser is willing to give. In my opinion, the words "consideration for the sale" as used in the schedule to the "Stamp Act," mean the consideration fixed by the agreement between the parties, as that for which the vendor is willing to sell to the purchaser. In this case the real nature of the transaction sufficiently appears upon the face of the agreement itself. I think that the person called upon to pay the tax is entitled, just as much as the Stamp Commissioner, to have recourse to the agreement for the purpose of ascertaining the real consideration, that is, what was agreed to be given by the purchaser and agreed to be accepted by the vendor at the time when the agreement was made. That consideration was undoubtedly £400,000, part of which was represented by £100,000 to be paid in cash, and the remainder by the allotment of shares estimated to be of the value of £300,000. That was the consideration for the agreement to sell, and remains the consideration for the agreement, independently of any subsequent rise or fall in the value of the shares. And the value of that consideration is, in my opinion, fixed as of that date. The nominal value of the shares is primá facie their real value. This, then, is the amount upon which the duty is to be assessed. The conclusion to which I have come is strongly fortified by the language of s 49 of the Act, the first paragraph of which provides that --

Where any property has been contracted to be sold for one consideration for the whole, and is conveyed to the purchaser in separate parts or parcels by different instruments, the consideration is to be apportioned in such manner as the parties think fit ....

What is the consideration meant? Of course, the consideration stated in the contract, that is to say, the single consideration stated in the contract.

The Commissioner of Stamps, however, contends that the value of the consideration is not the value at the date of the agreement of that which was agreed to be given and received, but its value at the date of the actual transfer. For the reasons I have given, I do not think that that is the true test. But even if it were, the Crown cannot succeed, because there was no evidence at all even tending to show that at the date of the transfer, which was in December, 1910, these numbered 300,000 shares were worth more than £1 each. On all points, therefore, the appeal fails.