Commissioner of Stamp Duties (N.S.W.) v. Pendal Nominees Pty. Limited and Anor

Judges: Mason CJ

Brennan J
Deane J
Dawson J
Toohey J

Court:
High Court

Judgment date: Judgment handed down 16 March 1989.

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Brennan J.

The material provisions of the sale deed and the trust deed are set out by the Chief Justice with whose judgment I am in general agreement. I see the resolution of this case as depending on the answer to the

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question: is the second part of cl. 1.4 of the sale deed a declaration by PN of a trust for BTA? A covenant by PN to hold shares as nominee for BTA is, in my opinion, tantamount to a covenant to hold the shares as trustee for BTA. A ``nominee'' in this context is one who is appointed to take title, not beneficially but for the benefit of the person whose nominee he is. The fact that cl. 1.4 is in the language of covenant does not deny it the character of a declaration of trust. By its terms, therefore, cl. 1.4 purports to be a declaration of trust for BTA. It is not a declaration of trust of a mere expectancy. Clause 1.4 does not wait upon the vesting of the trust property before it has effect. By cl. 9, PN acquires a right ``both for itself and as nominee for BTA in its capacity as trustee of the BTA Property Trust'' to enforce the agreement for the sale of the Seven Hills shares. If the shares are to be held on trust for BTA when vested in PN, PN's right to enforce the contract for the sale of the Seven Hills shares is also held upon trust for BTA. Clause 1.4 has an inmediate operation. If cl. 1.4 were not a declaration of the trust on which the Seven Hills shares are to be vested, the trust on which PN was to hold the shares would be a resulting or constructive trust. But a court of equity does not pass by a declaration of trust in a search for a resulting or constructive trust. In
Commr of Stamp Duties (Qld) v. Jolliffe (1920) 28 C.L.R. 178 , Isaacs J. said (at p. 188):

``If a trust is seriously declared in explicit and direct terms, there is an end of the matter; for the declaration is the `creation of the trust' referred to by Lewin, 12th ed., at p. 88. There is an exception to which I shall refer, but apart from that the rule holds. It is the `declaration' of trust upon which equity fastens.''

When there is no doubt that the declarant contemplates the creation of a trust - the point on which Isaacs J. dissented in that case but which is not open to doubt in this case - I respectfully agree that equity fastens on the declaration rather than searching for less certain indicia of intention in order to find a resulting trust. And if there is an express trust for BTA declared by PN, there is no room for imposing a constructive trust in favour of the unit holders under the trust deed unless, perhaps, the trust declared is inimical to the interests of the unit holders. For reasons presently to be mentioned, it is not.

It is argued that cl. 1.4 is no more than a statement of the trust obligation otherwise imposed on PN. The trust obligation to which that argument relates is the obligation of a nominee referred to in the antecedent trust deed. PN was not a party to that deed. The general rule in determining the liability of an instrument to stamp duty is that its purport ``depends upon its contents, and not upon any extrinsic circumstance'': per Dixon A.I. in
Edwards, Dunlop & Co. Ltd. v. Harvey (1927) V.L.R. 37 at pp. 47-48 , a judgment to which Dixon J. adhered in
Commr of Stamp Duties (Qld) v. Hopkins (1945) 71 C.L.R. 351 at p. 378 . But the purport of the instrument is not conclusive. In the last-mentioned case, Dixon J. adopted the qualification stated by the second edition of Halsbury's Laws of England:

```... but the Court is not bound by the apparent tenor of an instrument, and will decide according to the real nature of the transaction, receiving, if necessary, extrinsic evidence.'''

In my opinion, there is nothing in the trust deed which denies that the transaction to which the latter part of cl. 1.4 relates is other than what it appears to be. Under the trust deed, BTA was obliged either itself to hold the assets constituting the trust fund upon the trusts of that deed or to cause a nominee in whom those assets were vested to hold them upon those trusts. The fulfilment of that obligation by BTA is entirely consistent with the existence of the trust declared in the latter part of cl. 1.4. In
Timpson's Executors v. Yerbury (H.M. Inspector of Taxes) (1936) 1 K.B. 645 , Romer L.J. said (at p. 664):

``Now the equitable interest in property in the hands of a trustee can be disposed of by the person entitled to it in favour of a third party in any one of four different ways. The person entitled to it (1.) can assign it to the third party directly; (2.) can direct the trustees to hold the property in trust for the third party (see per Sargant J. in In
re Chrimes [ [1917] 1 Ch. 36 ] ); (3.) can contract for valuable consideration to assign the equitable interest to him; or (4.) can declare himself to be a trustee for him of such interest.''

The second and fourth modes of disposition are presently relevant. BTA may hold the beneficial interest vested in it by PN's

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declaration of trust as trustee under the trust deed (the fourth mode) or it may perform its obligation under the trust deed by giving PN a direction to hold the shares on the trusts of the trust deed (the second mode). Either of those means of ensuring that the trusts of the trust deed are impressed on the Seven Hills shares depends upon the efficacy of PN's declaration to vest in BTA the beneficial interest of which BTA disposes. There is no necessary incongruity between the provisions of the trust deed and PN's declaration of trust in cl. 1.4. The purport of cl. 1.4 is not denied by the extrinsic circumstances.

Once cl. 1.4 is seen to be a declaration of trust, the relevant category under the ``Declaration of Trust'' head of charge in the Second Schedule to the Stamp Duties Act, 1920 (N.S.W.) falls for determination. Clearly enough, it falls within para. (2)(a). It does not fall under para. (1) because PN is not the apparent purchaser, as the Chief Justice points out. It must be acknowledged that it is anomalous that a declaration of trust should attract only nominal duty when the declarant is the apparent purchaser and the beneficiary is the person who has actually paid the purchase price while a declaration of trust by a nominee of the apparent purchaser who has actually paid the purchase price attracts ad valorem duty. The anomaly is, of course, the result of the drafting of the head of charge which is markedly different in the New South Wales Act from the ``Declaration of Trust'' head of charge in similar statutes in other States.

PN's declaration does not fall within para. (3)(b) because the conveyance of the Seven Hills shares was not stamped with ad valorem duty. The Court of Appeal was mistaken in thinking the conveyance was so stamped. Had the conveyance been stamped ad valorem, cl. 1.4 may have fallen within para. (3)(b), even though the conveyance followed the execution of the sale deed. In
D.K.L.R. Holding Co. (No. 2) Pty. Ltd. v. Commr of Stamp Duties (N.S.W.) 82 ATC 4125 at pp. 4152-4153; (1982) 149 C.L.R. 431 at pp. 474-476 , I explained my reasons for this view. For the reasons earlier given it would have been arguable - it is unnecessary to decide it for the purposes of para. (3)(b) - that the trust declared would have been the same as the trust subject to which the Seven Hills shares were conveyed. It may be noted that an instrument does not avoid ad valorem duty under para. (3)(b) if it is an instrument which would otherwise fall within para. (2) - being ``[a]ny such instrument as aforesaid'' - if the trust declared is not the same as the trust subject to which the property was conveyed to the declarant.

For these reasons, which should be read together with the reasons given by the Chief Justice, I would allow the appeal and answer the questions in the stated case as he proposes.