SANWA AUSTRALIA FINANCE LIMITED v COMMISSIONER OF STATE TAXATION (WA)

Judges:
White J

Court:
Supreme Court of Western Australia

Judgment date: Judgment handed down 22 March 1993

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White J

The Appeal

This appeal concerns a question relating to the amount of stamp duty properly to be assessed in respect of a contract between Portman Mining Limited, Gayna Park Pty Ltd and Alsace Pty Limited, as vendors, and the appellant, Sanwa Australia Finance Limited, as purchaser, pursuant to a written contract entered into in October 1991, of certain equipment installed at the mining camp at Woodie Woodie in this State.

Stamp duty was assessed by the respondent on the total purchase price of the equipment, namely $420,000.00, in the sum of $13,575.00, and the appellant objected to the assessment. That objection was disallowed by the respondent and the objection has been transmitted to this Court by way of appeal in accordance with O 77 rr 5 and 6 of the Rules of the Supreme Court.

Although the appellant filed a list of twenty authorities, in fact the appellant's counsel referred to only two in the course of argument, namely
Eon Metals NL v Commr of State Taxation (WA) 91 ATC 4841 and
Holland v Hodgson [1872] LR 7 CP 328, while counsel for the respondent was content to rely on the decision of Ipp J in the former.

The Background

On or about 6 April 1991, Portman Mining Limited, Gayna Park Pty Ltd and Alsace Pty Limited were members of the Pilbara Manganese Joint Venture, Portman Mining Limited being the project manager for that joint venture. In that capacity, Portman Mining Limited entered into a written contract with The Westralian Caterer Pty Ltd (``the Contractor'') for the supply, mobilisation and installation of the Mining Camp at Woodie Woodie.

The Mining Camp was duly set up in accordance with that contract and was the subject of the sale in October 1991, to which I have referred above.

The Stamp Act 1921

Sections 16(1) and (2) and 74(1) of the Stamp Act 1921 are in the following terms:

``16(1) From and after the commencement of this Act and subject to subsection (2), the duties to be charged for the use of the Crown on or in respect of the instruments specified in the Second Schedule shall, subject to this Act, be the duties specified opposite to those instruments in that Schedule, which duties shall be in substitution for the duties chargeable under the enactments repealed by this Act.

(2) The duties specified in the Second Schedule shall be subject to the exemptions specified in the Third Schedule or otherwise by or under this Act and in any other Act for the time being in force.''

``74(1) Every contract or agreement, howsoever executed, for the sale of any estate or interest in any property shall be charged with the same ad valorem duty to be paid by the purchaser as if it were an actual conveyance on sale of the estate, interest or property contracted or agreed to be sold.''

Certain exemptions from duty are provided for in the Third Schedule to the Stamp Act 1921 and these include Item 2(7), as follows:

``(7) A conveyance or transfer of any estate or interest in any real or personal property locally situated out of Western Australia, or in goods, wares or merchandise, or in any

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ATC 4196

ship or vessel, or part interest or share or property of or in any ship or vessel.''

The Issues on Appeal

It was common cause that the real issue between the parties on the appeal was as to the nature of the subject matter of the sale and, in particular, whether the Equipment could properly be described as falling within the description in Item 2(7) of ``goods, wares or merchandise''.

In Eon Metals NL v Commr of State Taxation, Ipp J has conveniently gathered together and examined the relevant authorities while dealing with a somewhat similar issue. As His Honour there points out, at 4845:

``It is plain that while regard should be had to all relevant circumstances, no particular factor necessarily has primacy and every case depends on its own facts.''

In my opinion, the correct approach to the present appeal is to consider, first, the subject matter of the contract. The contract in relation to which the stamp duty payable is in issue provides, in Schedule 1, for the sale of:

``Transportable Mining camp components at Woodie Woodie, Pilbara, Western Australia including all elements, plant, materials, equipment and units as detailed in the Contract Documents.''

The purchase Price was $420,000 and the estimated delivery date was 4 October 1991.

The ``Contract Documents'' referred to are defined in preamble A as ``... contract documents dated 24 April 1991 for the supply, mobilisation and installation of the mining camp at Woodie Woodie between Portman Mining Limited as project managers for the Pilbara Manganese Joint Venture and the Westralian Caterer Pty Limited''.

The latter contract was for the supply, transport and installation of the equipment at the site, including the preparation of the Site and the contract price was $420,000.00. It is apparent that the subject matter of the contract with which this appeal is concerned was, in effect, the Mining Camp as set up pursuant to the Contract Documents.

Evidence was given by Mr John Albert Brodziak, a Civil Engineer and the Operations Manager of Portman Mining Limited, as to his understanding that the contract price, in relation to the contract of 6 April 1991, could be regarded as having been made up as follows:

    The units                  $275,000.00
    Transport                    70,000.00
    Labour in installation       45,000.00
    Other materials installed    30,000.00
                               -----------
                               $420,000.00
                               ===========
      

At the outset, counsel for the respondent conceded that all of the transportable units, together with 2 water tanks and 3 electric water pumps are chattels which were incorrectly taken into account when stamp duty was assessed. He suggested that a figure of $275,000.00 for the units and $2,000.00 for the other items the subject of the concession should be deducted from the contract price of $420,000.00 and that the duty should properly have been assessed on the difference, namely $143,000.00.

Counsel for the appellant, however, while accepting the concession, submitted that it did not go far enough and that duty should have been assessed only on the sum of $150.00 (the replacement cost of the reticulation PVC piping, which Mr Brodziak said was not worth removing). I am unable to accept this submission, because, in my opinion, it represents an incorrect approach to the issue. The question before me is concerned with the stamp duty payable under the Act on the contract at the date it was entered into and the value of the piping at the end of the life of the mine must, I consider, be wholly irrelevant. Furthermore, the duty is not to be calculated on the basis of the materials which are not recoverable at the end of the life of the mine but on the value of the subject matter of the contract, less the value of the items falling within the exemptions in Item 2(7) of the Third Schedule.

The evidence of Mr Brodziak was not controverted. He said that the equipment had been placed upon concrete blocks resting on the ground and that certain of the units were connected to electricity and water supplies. In view of the concession by counsel for the respondent, I need not deal with the units or other items conceded. What is left is the following items, referred to in Mr Brodziak's affidavit:

The electrical works

Mr Brodziak referred to 2 generators, but it appears that these formed no part of the purchase and that they were not included in the

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ATC 4197

assessment of duty, so that I may safely disregard them.

There are two electrical distribution boards and cabling. They consist of free-standing units made of pressed steel or aluminium, the one bolted to a concrete plinth and the other fixed to a steel post concreted into the ground. He said that they could easily be unbolted and carried by two men and would certainly be removed at the end of mining operations. The cabling, he said, could be lifted, but this would probably only be done to recover their value as salvage. I am of the view that the cabling should not be treated as falling within the exemption under Item 2(7).

Plumbing (including Water Tanks)

The two water tanks and three small electric water pumps were the subject of the respondent's concession. Mr Brodziak said that the PVC piping in the sewerage and plumbing systems ``might be recovered at the end of mining for its salvage value''. In the light of his evidence relating to the other PVC piping, referred to below, I consider that the PVC piping should not be regarded as falling within the exemption under Item 2(7).

Concrete Works

Mr Brodziak described these as consisting primarily of pathways and slabs for air- conditioners and other equipment. They were specifically designed for a lifespan of between 3-5 years with the intention that they would break up and leave as little as possible to be removed by the time mining operations ended and would not be removed unless to rehabilitate the site. It seems plain that these cannot be said to fall within the ambit of the words ``goods, wares or merchandise,'' as used in Item 2(7) of the Third Schedule of the Act.

Reticulation

Mr Brodziak said that this consisted of about 120m of PVC reticulation pipe, several sprinkler heads and a timer valued at about $120.00. The timer is easily disconnected and could be removed as would the sprinkler heads, which would have to be unscrewed. However, the pipes would probably not be removed because their replacement cost of $150.00 would not justify it.

Pergola

There is a 12m × 6m free standing pergola made of timber cross-beams and posts bolted together which would be unbolted and removed at the end of operations. In my opinion, this should in the circumstances, be classified as a chattel, falling within the exemption.

The dutiable Amount

From the starting figure of $420,000.00 there should, in my opinion, be deducted the value, at the date of the Contract, of the following items which are to be regarded as chattels and as falling within the exemptions provided for in Item 2(7) of the third Schedule to the Act:

• ``(1) The transportable units, at a value of $275,000.00;
• (2) The two electrical distribution boards;
• (3) The two water tanks and three small electric water pumps;
• (4) The sprinkler heads and the timer (the latter valued at $120.00);
• (5) The pergola.''

The value of certain of these items as at the date of the Contract was not the subject of adequate evidence before me. In order to decide this Appeal, it is necessary that I should determine the value of those items whose value is to be deducted from the price of $420,000.00 for the purpose of arriving at the figure in respect of which duty is to be assessed.

I shall hear from counsel as to the appropriate orders to be made in the light of these Reasons.