Superannuation Fund Investment Trust v. Commissioner of Stamps (S.A.)

Judges:
Hogarth ACJ
White J
Jacobs J

Court:
Supreme Court of South Australia

Judgment date: Judgment handed down 21 August 1978.

---

Hogarth A.C.J.: This is an appeal against an assessment by the respondent of stamp duty on three memoranda of transfer to the appellant. The transfers are from Arndale (Marion) Pty. Ltd., Arndale (Kilkenny) Pty. Ltd. and Arndale (Burnside) Pty. Ltd., and relate to land on which shopping centres are erected. The total purchase moneys payable under the three memoranda of transfer was $34,430,000. After settlement the Deputy Commonwealth Crown Solicitor, stating that he was acting as agent for the respective parties to each of the three transactions, applied to the respondent for his opinion as to ``the amount of duty chargeable, if any'' on each of the memoranda of transfer. These applications were made pursuant to sec. 23 of the Stamp Duties Act 1923 as amended, subsecs. (1) and (3) of which read:

``(1) Subject to any regulations made under this Act, the Commissioner may be required by any person to express his opinion with reference to any executed instrument upon the following questions -

---

ATC 4493

• I. Whether it is chargeable with any duty:
• II. With what amount of duty it is chargeable.

(3) If the Commissioner is of opinion that such instrument is chargeable with duty, he shall assess the duty with which it is, in his opinion, chargeable, and when the instrument is duly stamped in accordance with the assessment of the Commissioner, it may also be stamped with a particular stamp denoting that it is duly stamped.''

The form of application for opinion of the respondent accompanying each transfer bore a request that the transfer should be marked ``Not subject to duty''. The respondent, however, assessed the three transfers with stamp duty amounting in all to $1,373,990. The appellant agrees that if the transfers are chargeable with stamp duty at all, the amount so assessed is the correct amount. The appellant maintains, however, that the documents are not chargeable with stamp duty; and accordingly it has commenced the proceedings which led to this appeal.

The appellate provisions of the Stamp Duties Act are to be found in sec. 24, which reads:

``24. (1) Any person who is dissatisfied with the assessment of the Commissioner may, on payment of duty in accordance therewith -

• (a) within fourteen days after the date of the Commissioner's assessment forward to the Treasurer a statement of the grounds of his objection to the assessment; or
• (b) within twenty-one days after the date of the Commissioner's assessment, appeal to the Supreme Court.

(2) If such person forwards to the Treasurer a statement of the grounds of his objection to the Commissioner's assessment, the Treasurer may confirm or modify such assessment. If such assessment is not confirmed, the amount of the duty to be ultimately retained shall be that fixed by the Treasurer, and the difference shall be refunded to the person forwarding the statement.

(3) If, upon the confirmation or modification by the Treasurer of the Commissioner's assessment, such person is still dissatisfied, he may, within twenty-one days after the Treasurer's decision is communicated to him, appeal to the Supreme Court.

(4) For the purpose of any appeal to the Supreme Court under this section, the appellant may require the Commissioner to state and sign a case setting forth the question upon which his opinion was required and the assessment made by him.

(5) The Commissioner shall thereupon state and sign a case accordingly and deliver the same to the appellant, and upon his application such case may be set down for hearing in the Supreme Court.

(6) Upon the hearing of such case (at least seven days' notice of which shall be given to the Commissioner) the Court shall determine the question submitted, and assess the duty, if any, chargeable under this Act.

(7) If it is decided by the Court that the assessment of the Commissioner is erroneous, any excess of duty which may have been paid in accordance with such erroneous assessment, together with any penalty which may have been paid in consequence thereof, shall be ordered by the Court to be repaid by the Commissioner to the appellant, together with the costs incurred by him in relation to the appeal.

(8) If the assessment of the Commissioner is confirmed by the Court, the costs incurred by the Commissioner in relation to the appeal shall be ordered by the Court to be paid by the appellant to the Commissioner.

(9) For the purposes of this section the Supreme Court may consist of one Judge only.''

In accordance with subsec. (1) of sec. 24, the appellant paid the amount of the duty assessed by the respondent, and within the fourteen days allowed, forwarded to the Treasurer a statement of the grounds of its objection to the assessments pursuant to para. (a) of that subsection. The Treasurer disallowed the objection, and confirmed the

---

ATC 4494

respondent's assessments. Thereupon the present appeal was commenced pursuant to the provisions of subsec. (3).

For the purposes of the appeal, a case was stated to this Court under subsec. (4) of sec. 24. The questions submitted for the opinion of the Court were:

``(a) Whether the instruments and each of them are chargeable with the ad valorem duty assessed by the respondent.

(b) Whether the appellant is liable to pay stamp duty.''

The first question which arises in this appeal is as to the power of the respondent to state the case in this form. No question arises as to para. (a), but I am of opinion that it was beyond the power of the respondent to ask the question contained in para. (b), and that it is beyond the power of the appellant to raise that question in this appeal.

Under sec. 23, it is only the questions set out in subsec. (1) of that section which the appellant was entitled to and indeed did ask the respondent: that is to say whether the documents were chargeable with any duty, and if so what was the amount of duty so chargeable. The power to assess an instrument with duty is given to the respondent only if he is of the opinion that the instrument was chargeable with duty (sec. 23(3)) and it is against that assessment that an appeal is given under sec. 24. Neither sec. 23 nor sec. 24 provides any machinery whereby the respondent, or, on appeal, the Treasurer or this Court, may rule as to the party liable to pay the duty. The topic of the liability of the parties to pay stamp duty is dealt with by sec. 5.

Subsection (1) of sec. 5 enacts that, subject to the exemptions contained in the Second Schedule and other provisions of the Act, ``there shall be charged, for the use of His Majesty, the several stamp duties specified in the said schedule and elsewhere in this Act upon and for the several instruments therein set forth...''. Subsection (2) provides that the duty chargeable upon any such instrument shall be a debt due to His Majesty ``from every party who executes such instrument'', and that it shall be recoverable in the name of the respondent on behalf of His Majesty from any such party or parties in any court of competent jurisdiction. It is, therefore, not for the respondent to give a ruling on the question of the liability of a party for payment of stamp duty, but for a court of competent jurisdiction to decide the question in proceedings brought in that court by the respondent.

For these reasons, therefore, I am of opinion that it is only the first of the two questions submitted to this Court which we have jurisdiction to entertain and answer. I turn to consider that question.

Basic to the claim of the appellant that the transfers are exempt from stamp duty is its contention that, in the words of its counsel Mr. Debelle, it is the alter ego of the Crown in right of the Commonwealth. For the appeal to succeed, that submission must be accepted. But even if it is accepted, the appellant must succeed also on one of several secondary points which were argued before us, if the appeal is to be allowed.

The appellant is a body corporate established pursuant to sec. 28 and 29 of the Superannuation Act 1976 (Commonwealth), which makes provision for a superannuation scheme for retired members of the Commonwealth Public Service, and for certain other persons specified in the Act whose employment had some connection with the Commonwealth Government, as, for example, employees of certain instrumentalities which are supported financially by the Commonwealth.

The first question for decision, then, is whether the appellant is to be equated with the Crown in right of the Commonwealth.

I have had the opportunity of reading the reasons for judgment prepared by White J. He sets out in detail the provisions of the Superannuation Act and other legislation which affects this basic question; and I forebear to repeat here what he has said.

I agree that the appellant is not to be equated with the Crown in right of the Commonwealth. I reach this conclusion because, on my understanding of the Superannuation Act , such was the intention of the Parliament when it enacted the legislation in 1976. In coming to this conclusion I am influenced particularly by the distribution of the functions which are necessary for the working of the Act between the Commissioner on the one hand and the

---

ATC 4495

appellant on the other. It seems to me that the intention of the Parliament was to set up a body, the appellant, as an independent authority for the very purpose of differentiating it from the Crown. I have given close attention to the arguments of counsel, including their references to the various sections of the Superannuation Act in relation to other legislation such as sec. 60 of the Audit Act 1901; and I have considered the Repatriation and other cases to which we were referred. But in my opinion nothing conclusive is to be gleaned from a detailed consideration of these matters; and I do not think it would be profitable to traverse them now in any detail. It is necessary, I think, not to get lost in the wood, not to lose sight of the forest because of the trees.

The overall picture as I see it is this: The Superannuation Act sets up the Trust (the appellant) comprised of three persons who are designed to represent different interests. By sec. 29, the appellant is to be a body corporate with perpetual succession, the right to hold and dispose of real and personal property, and the power to sue and be sued in its corporate name.

The Superannuation Fund is created by subsec. (1) of sec. 40 of the Superannuation Act . By subsec. (2) it is provided that the Superannuation Fund ``shall form part of the Trust Fund referred to in sec. 60 of the Audit Act''. Section 60 of the Audit Act refers to a separate account to be kept in the Treasury, to be called the Trust Fund, ``of all moneys which shall be placed to the credit of that fund, under separate heads to be directed by the Treasurer''. This might suggest that the Superannuation Fund consisted only of the moneys which are to be accounted for as provided by sec. 60 of the Audit Act . But this interpretation lies uneasily with other provisions of the Superannuation Act such as sec. 41(2)(e), which gives the appellant the power to open bank accounts; and with sec. 42(4) which assumes that there will be assets of the Superannuation Fund other than moneys. The result of this is that, in spite of the apparently all-embracing requirements of sec. 40(2) of the Superannuation Act , and sec. 60 of the Audit Act , the investments of the appellant in general will not be under the immediate control of the Treasurer as part of the Trust Fund.

Although the Commonwealth Government has an indirect interest in the financial stability and prosperity of the Fund, it has no direct interest in any of the moneys in that Fund. The Fund consists of contributions made to it out of the salaries of contributors; and, in the hands of the appellant, those moneys are not mingled with any Commonwealth moneys. The scheme for the payment of benefits generally on the retirement of a contributor is for the benefits to be paid direct out of Commonwealth moneys; and for an amount which is considered appropriate (presumably on an actuarial basis) to be taken from the Superannuation Fund and paid to the Consolidated Revenue Fund. In the average case this amount will not be enough to pay in full the superannuation benefits to which the retiring contributors will be entitled. The Commonwealth therefore has a direct financial interest in the preservation and wise investment of the moneys in the Superannuation Fund, but not in the Fund itself. As I have said, there is no mingling of Commonwealth funds and contributors' funds in the hands of the appellant. It seems to me that this is the result of a deliberate decision by the Parliament to separate the duty of the handling of the large amount of moneys which represents the contributions of members of the Public Service and other contributors from the duties of the Commissioner, who might well be properly regarded as the Crown in right of the Commonwealth. The purpose, I have little doubt, is to reassure the contributors that their moneys are inviolable, safe in the hands of an independent authority, and not available for general purposes, however dire an economic or financial situation may develop.

For these reasons, I agree that the appellant is not to be regarded as the Crown in right of the Commonwealth, and, strictly, therefore, it is not necessary to go on to answer the second series of questions to which I have referred; but I propose to set out my views on them. The main points argued were:

1. That the transfers fall within para. 13b of the general exemptions from all stamp duties, in the Second Schedule of the Stamp Duties Act . That paragraph exempts from

---

ATC 4496

stamp duty, inter alia, a ``conveyance, whether on sale or otherwise, to the Crown, or to any person on behalf of the Crown''.

I agree with White J., for the reasons which he gives, that the expression ``the Crown'' in para. 13b refers to the Crown in right of the State only, and not to the Crown in right of the Commonwealth.

2. That in assessing the transfers, the respondent had in effect required the appellant to pay duty on the transfers, since, pursuant to sec. 27 of the Stamp Duties Act , the appellant was unable to have the transfers registered at the Lands Titles Office until they had been stamped.

It is true that sec. 27 prohibits the Registrar-General from registering the transfers unless they are stamped. But this leaves it for contracting parties to make whatever arrangement suits them. Although by sec. 20(1)(i) of the Stamp Duties Act an instrument may be stamped without penalty ``within one month after the execution thereof'', stamp duty became chargeable on the transfers as soon as they were executed ( Stamp Duties Act , sec. 5). This raises the question, at what stage were the documents executed?

Before the enactment of the Real Property Act Amendment Act 1939, there could have been no question. Until that amendment, under sec. 96 of the Real Property Act , the only requirement when land was intended to be transferred was for the registered proprietor to execute a transfer in the form of the Sixth Schedule to the Act. There was no requirement for the transferee to execute the document. A new section, sec. 96a was added by the amending Act of 1939. Subject to certain provisos to which I will refer, that section reads:

``96a. Every transfer shall contain a statement signed by the transferee indicating that he accepts the transfer or grant of the land, right-of-way or easement....''

It is not the transfer itself which is to be signed, but a statement which is to be contained in it. Furthermore, there are two provisos. Proviso (a) provides that the Registrar-General may accept and register a transfer without such a statement ``if he is satisfied that it is difficult or impossible to procure the signature of the transferee''; and proviso (b) provides that where the transferee is an infant or mentally defective person, the statement shall be signed ``by his guardian or the committee of his estate...; and the acceptance under this section of a transfer on behalf of an infant shall not affect any right of that infant or of any person on his behalf to avoid or disclaim the transfer''.

Proviso (a) assumes that the document is a ``transfer'' which has been executed, is stampable and registrable, notwithstanding that it has not been signed by the transferee. Proviso (b) contemplates the case where, not ``the transfer'' but ``the said statement'' may be signed, in the case of an infant, by a guardian who (unless appointed specially for the purpose under sec. 245 of the Real Property Act ) has not at law the right to execute a document on behalf of his ward. In my opinion, therefore, the signature of an acceptance, as contemplated by sec. 96a, does not amount to the execution of the document. A transfer is complete when it is executed by the transferor, and stamp duty is payable forthwith. In most cases, it is probably convenient that settlement should take place within one month of the execution of a transfer by the transferor, and that stamp duties should be paid thereafter by the transferee. I believe that this is usually provided for in the contract of sale; and in that event no doubt the parties take this into account in determining the amount of the purchase price. But it seems to me that the transfer is stampable, at law, as soon as it is executed by the transferor; that is, before settlement. If a party chooses to accept an unstamped transfer without protecting himself by the terms of the contract of sale, or otherwise, against future liability for payment of stamp duties, that is his misfortune.

The result of the foregoing is that, as I see the situation, the Registrar-General is lawfully prohibited from giving effect to a memorandum of transfer which should have been stamped on execution by the transferor, and it is not to the point that, in order to achieve its registration, the appellant chose to do so. The result is, no doubt, to throw an economic burden on the appellant, but not a burden imposed by law.

---

ATC 4497

3. That on a proper construction of the Superannuation Act and the Stamp Duties Act , the respondent should have concluded that there was an inconsistency between a law of the Commonwealth and a law of the State of South Australia, and that therefore the transfers were exempt from duty.

There is no express inconsistency between the State and the Commonwealth legislation such as would bring sec. 109 of the Commonwealth Constitution into play. Indeed, the inclusion in sec. 42(5) of the Superannuation Act of an exemption of the income of the Superannuation Fund from the payment of State or Federal income tax suggests that, although the Parliament directed its mind to the question of State imposts, it did not intend to relieve the Fund of them in general. I do not think that the addition of subsec. (5A) to sec. 42, by the Superannuation Acts Amendment Act 1978, affects the situation. The subsection reads:

``(5A) Subject to sub-section (5B), the Trust and the Fund are not otherwise subject to taxation under a law of the Commonwealth or to taxation under a law of a State or Territory to which the Commonwealth is not subject.''

Neither subsec. (5) nor subsec. (5A) is expressed in the traditional form of an enacting provision, that the Trust and the Fund ``shall not be'' subject to taxation; but I do not understand the subsections to be intended to be declaratory of the law as it is and has been, so as to apply retrospectively to the transactions which we are considering.

4. That the respondent was prohibited by sec. 114 of the Commonwealth Constitution from assessing duty as being payable on the transfers.

Mr. Debelle did not seek to argue that the State legislation sought to impose any tax on the estates in the land which were being transferred by the documents, but argued that the requirement for the memoranda of transfer to be stamped, when they had become the property of the Commonwealth on settlement, meant that they, as property of the Commonwealth, were subject to taxation by the State, contrary to sec. 114 of the Commonwealth Constitution. But I do not think this is so. For the reasons I have already given, I think that the documents became subject to payment of stamp duties before they were ever the property of the appellant. And, even assuming the appellant to be the alter ego of the Crown in right of the Commonwealth, I do not see how that fact could erase the dutiable nature of the documents, once they had become dutiable before settlement. In this regard, I am speaking of the executed documents as not being the property of the Commonwealth. It may be that the actual pieces of paper on which the transfers were typed were supplied by the appellant to the transferors for execution. But it seems to me that the substance of the matter is that the executed transfers were not the property of the transferee prior to settlement. I therefore do not think that there is any substance in this point.

For these reasons I would dismiss the appeal.