KITCHENER MINING NL v COMMISSIONER OF STATE TAXATION (WA)

Judges:
Ng C

Court:
Supreme Court of Western Australia

Judgment date: Judgment handed down 23 July 1993

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Commissioner Ng

This is an appeal against the decision of the Commissioner of State Taxation (``the Commissioner'') in not allowing a rebate of duty pursuant to s 15A of the Stamp Act, 1921 (``the Act'').

By an undated Deed lodged with the State Taxation Department on 26 October 1988 (``the Deed'') between the appellant, Haoma North- West NL (``Haoma'') and Bamboo Gold Mines NL (``Bamboo Gold''), Haoma and Bamboo Gold agreed to transfer to the appellant all their respective rights and interests in certain mining tenements (``the mining tenements'') operated by the appellant, Haoma and Bamboo Gold pursuant to a joint venture known as the Bamboo Creek Joint Venture as described in the Deed. The consideration was $1.00 payable to each of Haoma and Bamboo Gold subject to the appellant discharging the liabilities of Haoma and Bamboo Gold to Banque Europeenne de Credit S.A. (``BEC''), and BEC discharging certain securities over the mining tenements. On 30 September 1989 the Commissioner issued a Stamp Duty Assessment for the sum of $898,654 calculated upon a consideration valued by the appellant's accountants at $21,250,000 for the rights agreed to be transferred thereunder. An objection was filed by the appellant pursuant to s 32 of the Act, but without success and consequently the Commissioner confirmed the assessment. The appellant was unable to pay the amount of duty assessed and, as alleged by the appellant, as nothing had been done pursuant to the Deed, the parties thereto agreed to rescind the Deed on 24 September 1990; whereupon on 2 October 1990, the appellant applied to the Commissioner for a rebate of the duty pursuant to s 15A of the Act. On 15 October 1990 the Commissioner requested for proof of the alleged rescission and on 9 November 1990 the Commissioner was sent the annual reports of the appellant, Haoma and Bamboo Gold for the years ending 30 June 1988 and 30 June 1989 (``the annual reports'').

On 12 December 1990 the Commissioner wrote to the appellant's solicitors:

``I refer to your letter dated 2 October 1990 and note that the parties have agreed to rescind the deed relating to the transfer of the joint venture tenements.

However in view of the fact that the restructure of the joint venture took place in December 1987 and the shares were issued to each of Haoma and Bamboo and their liabilities to BEC assumed by Kitchener, in consideration of the transfer of their interests in the Bamboo Creek Joint Venture, including their interests in the tenements, I am not satisfied under section 15A of the

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ATC 4557

Stamp Act that each of the matters to which a deed relates has not been or will not be carried into effect.

It should be noted that even if it was accepted that the provisions of section 15A were applicable and no duty was payable on the deed the parties would in any case be required to lodge a statement under section 31B of the Act and pay the duty accordingly in relation to the change in the beneficial ownership of the joint venture assets that occurred as a result of the restructure in December 1987.''

It would appear that the Commissioner disallowed the objection on the basis that he was not satisfied that the Deed had in fact been rescinded or that each matter contained in the Deed or to which the Deed related had not been and would not be carried into effect. The Commissioner was of the opinion that the appellant had acquired control of the assets of the Bamboo Creek Joint Venture and that the beneficial ownership in the mining tenements had passed to the appellant and that the appellant had assumed liability for the debts of Haoma and Bamboo Gold. The Commissioner had obviously based his opinion on the annual reports of the parties. The appellant lodged an objection against the decision of the Commissioner pursuant to s 32 of the Act, in essence, on the basis that the Commissioner had misdirected himself in the exercise of his discretion and erred in law in the application of s 15A. The objection to assessment is set out at pp 139 to 142 of the Transmission of Objection and the grounds of objection are as follows:

``1. Subsection 15A(1) of the Act relevantly provides that the Commissioner shall refund all the duty paid on an instrument where the Commissioner is satisfied that-

• (a) the instrument is rescinded, or
• has not and will not be carried into effect; and
• (b) no amount of money, right, property or service in respect of the instrument or in consequence of the rescission has been or will be paid or obtained.

2. Subsection 15A(7) relevantly provides that:

• (a) where the full amount of duty that would be chargeable on an instrument if section 15A did not apply has not been paid; and
• (b) the Commissioner has determined that a refund would have been payable if duty had been paid,

the duty chargeable on the instrument is the difference between the duty and the refund.

3. Pursuant to resolutions made in September 1990 each of the parties to the Deed resolved to rescind the Deed and the Deed was thereby rescinded by mutual agreement.

4. The Commissioner should therefore have been satisfied in respect of section 15A(1)(a).

5. No amount of money, right, property or service in respect of the Deed or in consequence of the rescission has been or will be paid to or obtained by any person.

6. The Commissioner should therefore have been satisfied in respect of section 15A(1)(b).

7. In the premises, the Commissioner should have determined that a refund would have been payable in respect of the Deed had duty been paid upon the Deed for the purposes of section 15A(7)(b), that the difference between the duty and the refund was nil and that the Deed was deemed not to be chargeable with duty under the Act pursuant to section 15A(8).

8. Kitchener Mining NL knows of no material which has been produced to or obtained by the Commissioner which would justify the assessment.

9. To the extent that the assessment is based upon:

• (a) the second limb of section 15A(1)(a) of the Act, or
• (b) section 31B of the Act,

the Commissioner has taken account of matters which are irrelevant to the exercise of his discretion.

10. To the extent that the Commissioner has failed to take account of:

• (a) the rescission of the Deed as declared in paragraph 3 of annexure `D' hereto; and
• (b) the matters declared in paragraphs 4, 5 and 6 of annexure `D',

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  ATC 4558

the Commissioner has failed to address a relevant consideration.

11. In any event, the assessment is in error:

• •
  Avon Downs Pty Ltd v FC of T (1949) 9 ATD 5 at 10; (1949) 78 CLR 353 at 360.
• •
  Commr of State Taxation (WA) v Scotford Cameron & Middleton Pty Ltd 81 ATC 4576 at 4578.
• •
  University of Western Australia v Commr of State Taxation (WA) 88 ATC 4020 at 4025.
• •
  JAW & S Property Management Nominees Pty Ltd v Commr of Stamp Duties (Qld.) 88 ATC 4966 at 4970-4971, 4973.

12. The Commissioner should allow the objection and modify the assessment.

13. The Commissioner should determine that subsections 15A(7) and (8) apply to the Deed and that the Deed is deemed not to be chargeable with duty under the Act.''

A statutory declaration dated 12 June 1991 in support of the objection, provided by Mr Donald Philip Taylor, the secretary of the appellant reads:

``1. I am the Company Secretary of Kitchener Mining NL (`Kitchener'). I am authorised to make this declaration on its behalf in support of an objection to an assessment pursuant to section 32 of the Stamp Act, 1921 in respect of the rescission of a Deed of October, 1988 (`the Deed'). The Deed is annexed to the Notice of Objection and marked `B'.

2. The facts verified in this declaration have been obtained from my perusal of company records and information derived from a former Company Secretary, John Hassen.

3. At the time of the original assessment of the Deed, and in the period to September 1990, Kitchener was incapable of paying the amount of stamp duty assessed. Accordingly, the Directors of each of the parties to the Deed, Kitchener, Haoma Northwest NL (`Haoma') and Bamboo Gold Mines NL (`Bamboo Gold') resolved on 10 September, 24 September and 10 September, 1990 respectively to rescind the Deed. The Deed was thereby rescinded by mutual agreement.

No amount of money, right, property or service in consequence of the rescission of the Deed has been or will be paid to or obtained by any person.

5. I refer to clause 1.2 of the Deed and confirm that:

• (a) Kitchener did not pay either Haoma or Bamboo Gold the sum of $1.00;
• (b) Kitchener did not discharge the liabilities of Haoma and Bamboo Gold to BEC;
• (c) BEC did not discharge the Securities as defined in the Deed;
• (d) Haoma and Bamboo Gold did not transfer to Kitchener any of their respective rights, title and interests in the mining tenements.

6. Accordingly, no amount of money, right, property or service in respect of the Deed has been or will be paid or obtained by any person.''

On 1 August 1991 the Commissioner wrote to the appellant's solicitors disallowing the objection and it reads as follows:

``I refer to your letter dated 12 June 1991 and advise that your objection has been accepted in accordance with section 32(2) of the Stamp Act.

After due consideration of the grounds, even though the parties claim they have resolved to rescind the Deed, I am not satisfied that the Deed has in fact been rescinded, annulled, discharged or cancelled, or that each matter contained in the Deed or to which the Deed relates has not been and will not be carried into effect.

It is clear from the published Annual Reports of each of the parties that Kitchener has acquired full ownership of the Bamboo Creek Joint Venture and is in control of the mining leases at Bamboo Creek referred to in the Deed. Even though the actual transfers of the tenements may not yet have been effected beneficial ownership of them is clearly being treated by the parties as having passed.

It also appears from the Annual Reports that Kitchener has assumed liability for the debts of Haoma and Bamboo to the extent and in the manner described in the Deed.

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ATC 4559

The arrangements evidenced by the Deed have been carried into effect and section 15A of the Stamp Act cannot apply in these circumstances. Your objection is disallowed.''

The relevant parts of s 15A are as follows:

``15A(1) Subject to this section, the Commissioner shall refund all of the ad valorem duty paid on an instrument where the Commissioner is satisfied that-

• (a) the instrument is rescinded, annulled, discharged or cancelled or that each matter contained in the instrument or to which the instrument relates and in respect of which ad valorem duty has been paid has not been, and will not be, carried into effect;
• and
• (b) no amount of money, right, property or service in respect of the instrument or in consequences of the rescission, annulment, discharge or cancellation or from the matter or matters not being carried into effect has been or will be paid to or obtained by-
  • (i) a person liable to pay ad valorem duty on the instrument; or
  • (ii) any other person (being a person who was not a party to the instrument at the date of its execution) with the consent, or at the direction, of a person liable to pay ad valorem duty on the instrument.

(2) Subject to this section, where the Commissioner is satisfied that-

• (a) an instrument on which ad valorem duty has been paid is rescinded, annulled, discharged or cancelled or each of the matters contained in the instrument or to which the instrument relates and in respect of which ad valorem duty has been paid has not been, and will not be, carried into effect;
• (b) an amount of money, right, property or service in respect of the instrument or in consequence of the rescission, annulment, discharge or cancellation or from the matter or matters not being carried into effect has or will be paid to or obtained by-
  • (i) a person liable to pay ad valorem duty on the instrument; or
  • (ii) any other person (being a person who was not a party to the instrument at the date of its execution) with the consent, or at the direction, of a person liable to pay ad valorem duty on the instrument; and
• (c) the total of the amount of money and the value of any right, property and service referred to in paragraph (b) is or will be less than the amount of the ad valorem duty paid,

the Commissioner shall refund the difference between the amount of the ad valorem duty paid and the total referred to in paragraph (c) as determined by the Commissioner.

...

(7) Where-

• (a) a refund of less than the full amount of ad valorem duty paid on an instrument is made under subsection (2), (3) or (4); or
• (b) the full amount of the ad valorem duty that would be chargeable on an instrument if this section did not apply has not been paid, and the Commissioner has determined that a refund would have been payable in respect of that duty under this section if the duty were paid,

the amount of duty with which the instrument is chargeable for the purposes of this Act is the difference between the full amount of ad valorem duty and the amount of the refund paid or payable in respect of that duty.

(8) Where all of the ad valorem duty paid on an instrument is refunded under subsection (1), or no duty is payable on an instrument by virtue of the operation of subsection (7), that instrument shall, from the date of the refund or the determination of the Commissioner under subsection (7), be deemed not to be chargeable with duty under this Act.''

On 8 August 1991 the appellant wrote to the Commissioner pursuant to s 33 of the Act requesting that the objection be treated as an appeal and be heard in the Supreme Court which is the subject of the present proceedings.

The appellant's case is that a deed may be cancelled by mutual consent;
Halsbury's Laws of England 4th ed. Vol. 12, para 1372. The

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ATC 4560

directors of the appellant, Haoma and Bamboo Gold, resolved in September 1990 respectively to rescind the Deed and the resolutions were communicated to the parties to the Deed and minutes of the resolutions are annexed to the affidavit of Mr Taylor sworn 3 December 1991 as annexure ``A'' thereto. It would appear that the Commissioner had disallowed the objection upon the basis that ``The arrangements evidenced by the Deed have been carried into effect and section 15A of the Stamp Act cannot apply in these circumstances'' - see the Commissioner's letter to the appellant dated 1 August 1991 at p 145 of the Transmission of Objection. The arrangements relate to events which occurred in 1987 following the execution of a letter of agreement of September 1987 (``the letter of agreement'') entered into between the appellant, Haoma and Bamboo Gold. In fact the letter of agreement is a restructure of the Bamboo Creek Joint Venture agreement entered into between the same parties in 1984 for the purposes of mining and exploration of gold and other minerals, wherein the appellant held a 50% interest and Haoma and Bamboo Gold 25% each. The letter of agreement provided for the purchase by the appellant of the participating interests of Haoma and Bamboo Gold in the Bamboo Creek Joint Venture in consideration for which the appellant would issue 8,806,750 and 8,102,250 shares to Haoma and Bamboo Gold respectively and would assume their liabilities to BEC, the financier of the Bamboo Creek Joint Venture; and a loan of $2 million would be issued by Haoma to the appellant to enable it to meet a scheduled repayment to BEC which was to be converted into 1.818 million shares in the appellant. The restructure of the Bamboo Creek Joint Venture was subject to shareholders approval. The Bamboo Creek Joint Venture agreement is exhibited to the supplementary affidavit of Mr Taylor sworn 17 January 1992 as annexure ``DT1'', and the letter of agreement is annexed and marked ``B'' to the affidavit of Mr Taylor sworn 3 December 1991. The letter of agreement was signed on behalf of Haoma and Bamboo Gold by Mr Robert Harry Duffin, a director of Haoma. The proposed restructure was announced by the directors of the appellant, Haoma and Bamboo Gold in their respective annual reports marked ``C'', ``D'' and ``E'' respectively, annexed to the affidavit of Mr Taylor of 3 December 1991. The restructure was approved by the shareholders of the appellant, Haoma and Bamboo Gold as deposed to by Mr Taylor in paras 18 and 19 of his affidavit of 3 December 1991. Mr Taylor further deposed in para 20 that shares in the appellant were issued to Haoma and Bamboo Gold on 17 December 1987 pursuant to the letter of agreement. The events which the Commissioner relied upon in the imposition of the duty occurred in 1987 and were completed before the Deed was executed, as is apparent from the annual reports, and no further action has been taken in relation to the restructure of the Bamboo Creek Joint Venture since the end of the 1987/88 financial year.

In the 1988 Haoma's annual report, the directors report mentioned the acquisition of shares and that they were not aware of anything that has happened since 30 June 1988. The Chairman's report noted that the ownership in the Bamboo Creek Joint Venture has been restructured as at 30 June 1988 and as a result Haoma now owns 30.13% of the issued capital of the appellant. This is substantially repeated in the 1988 annual reports of Bamboo Gold and the appellant. All these events transpired before the execution of the Deed.

In para 23 of Mr Taylor's affidavit of 3 December 1991, he deposed that the transfer of the mining tenements had not been executed to date and that the statement to the contrary appearing in the appellant's 1989 Annual Report (at 99 of the Transmission of Objection) is in error, and by para 25 he deposed that there was no significant change in the appellant's affairs after 30 June 1988 and by para 26 he deposed that the payments made by the appellant to BEC in the 1987/88 financial year and subsequently were made pursuant to the obligations which existed independently of the Deed and pursuant to the letter of agreement. The letter of agreement was stamped with nil duty on or about 14 March 1988. All this has not been challenged by the Commissioner.

According to Mr John Witford Hassen, the former secretary of the appellant, the existence of the Deed was brought about by a concern expressed by the auditors of the appellant, Messrs Touche Ross & Co, chartered accountants who were under the misconception that the mining tenements were not referred to in the letter of agreement. By para 5 of his affidavit of 17 January 1992, Mr Hassen deposed that the Deed was prepared and executed to satisfy the auditors, but it was

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ATC 4561

understood that only nominal duty would be payable on the Deed as the letter of agreement had already been assessed and stamped with nil duty.

To demonstrate that the auditors were under a misconception, Mr Taylor in para 5 of his supplementary affidavit of 17 January 1992 made reference to the term ``participating interest'' as including the mining tenements by virtue of reference to the Joint Venture agreement. This is also said to be in answer to the respondent's contention that the letter of agreement made no reference to mining tenements. The appellant contended that the expression ``participating interest'' in the letter of agreement included all mining tenements, the subject of the Deed. It should be observed that the Deed was not stamped as a conveyance on sale, but as an agreement for sale of property pursuant to s 74(1) of the Act. It would appear that the Commissioner treated the letter of agreement as collateral to the equitable charge by the bank over the appellant's beneficial interest in the mining tenements as security for moneys owing by Haoma and Bamboo Gold and as such he did not perceive it to be an agreement for sale, hence nil duty was stamped thereon.

In
Venture Management Ltd v Commr of State Taxation (WA) 91 ATC 4521 it was held by Franklyn J that once an instrument is presented for stamping the Commissioner has a duty to stamp it and has no power to re-assess duty on the instrument, based on the Commissioner being functus officio. Whether the Commissioner could reassess duty on the same instrument or assess duty under s 31B of the Act, is a matter that might be debated at another time and before another tribunal. Section 31B was introduced by the Stamp Amendment Act No. 98 of 1986 to catch transactions which were effected or completed without creating a dutiable instrument and would appear to be a departure from the normal concept that stamp duty should be upon instruments and not transactions.

Mr Hassen deposed in para 7 of his affidavit that in a discussion he had with an official of the Taxation Department, it was stated by the official that the relevant dates for the purposes of the assessment of the Deed were September and December 1987 which is when consideration and the beneficial interest passed pursuant to the letter of agreement. Viewing the letter of agreement as a whole, it is clear that the rights and obligations created under it included the acquisition of the mining tenements. In
IRC v Duke of Westminster [1936] AC 1 at 20 per Tomlin LJ:

``The principal passages relied upon are from opinions of Lord Herschell and Lord Halsbury in your Lordships' House. Lord Herschell L.C. in
Helby v. Matthews [1895] A.C. 471, 475 observed: `It is said that the substance of the transaction evidenced by the agreement must be looked at, and not its mere words. I quite agree:' but he went on to explain that the substance must be ascertained by a consideration of the rights and obligations of the parties to be derived from a consideration of the whole of the agreement. In short Lord Herschell was saying that the substance of a transaction embodied in a written instrument is to be found by construing the document as a whole.''

It is clear from the evidence before the court that the Commissioner had based his assessment upon the transactions that transpired in 1987 based upon the letter of agreement. In
Commr of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351, Latham CJ at 360 said that the scheme of the Stamp Act is to impose duties upon instruments and not upon transactions. Although the learned Chief Justice was the dissenting Judge in that case, his dictum had been often cited with approval in subsequent stamp duty cases.

It is also clear on the evidence before the court that nothing has occurred since the execution of the Deed as deposed to by Mr Taylor in his affidavit of 3 December 1991.

It was submitted on behalf of the Commissioner that the appellant should have appealed against the assessment of duty on the Deed in the sum of $898,654, but instead chose these proceedings to challenge that assessment by a circuitous way, asking the court to judge the correctness of the assessment upon the Deed. With respect to counsel for the respondent, the validity of the assessment has not been challenged. The calling in aid of s 15A is based upon the premise that the assessment was right in the first place. There is therefore nothing improper about the appellant choosing to resort to the provisions of s 15A instead of appealing against the assessment.

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ATC 4562

In determining whether to grant a rebate of the duty paid on an instrument, the Commissioner has to be satisfied pursuant to s 15A(1)(a) that the instrument is rescinded or has not been and will not be carried into effect and it was conceded by counsel for the Commissioner that the two limbs in that sub- paragraph should be read disjunctively. It is said that the Commissioner was not satisfied that there was a rescission and went on to consider the second limb, and he was also not satisfied that the Deed has not been and will not be carried into effect and was further not satisfied pursuant to sub-para (b) of s 15A(1) that no amount of money, right, property or service in respect of the Deed has been effected. It would appear that the Commissioner came to this decision upon the basis that the appellant had acquired full beneficial ownership of the Bamboo Creek mining tenements referred to in the annual reports, and therefore it could not be said that no amount of property in respect of the instrument has not been or will not be paid to or obtained by the person liable to pay ad valorem duty.

The Commissioner said that he had no knowledge that the Deed was rescinded because he had not been supplied with copies of the resolution of directors of the appellant, Haoma and Bamboo Gold rescinding the Deed, despite written request being made to the solicitors for the appellant on 15 October 1990 - see p 19 of the Transmission of Objection. However, in reply to the Commissioner's request of 15 October 1990, the solicitors for the appellant wrote to the Commissioner on 9 November 1990 as follows:

``In relation to your request for Director's resolutions, we are not convinced that your request is proper given that minutes of Directors' meetings are usually confidential. However, you may wish to direct your request to the Directors of those companies, who may have no objection to providing you with copies of the resolutions.''

Unfortunately, there was no follow-up by the Commissioner as no request was made to the directors of those companies. Nevertheless, the Commissioner had earlier been informed by letter of 2 October 1990 by the solicitors for the appellant as follows:

``We advise that we act on behalf of Kitchener Mining NL.

We are instructed to advise that each of the parties to the October 1988 Deed, Kitchener Mining NL, Haoma Northwest NL and Bamboo Gold Mines NL, have agreed to rescind the Deed. We enclose herewith a copy of the letters confirming the rescission of the Deed, and requesting us to advise you of that rescission.

No benefits have been conferred pursuant to the Deed and no interest in mining tenements have been transferred. Our client seeks your confirmation under Section 15A of the Stamp Act that the duty assessed on the October 1988 Deed is cancelled. We look forward to your early reply.''

The enclosed letters were from the directors of the appellant, Haoma and Bamboo Gold, informing the appellant's solicitors to the effect that they had by resolution rescinded the Deed. Moreover, the Commissioner had in his letter of 12 December 1990 noted that the parties have agreed to rescind the Deed. I am therefore satisfied on the evidence that the Commissioner had knowledge of the rescission of the Deed by the appellant, Haoma and Bamboo Gold. The Commissioner had either erred in not considering the first limb of s 15A(1)(a) or that he had, in error, applied the second limb as well.

It was argued on behalf of the Commissioner that the Deed is in respect of the transfer of the mining tenements to the appellant; and it is not the case of transfer of the tenements as a consequence of or by virtue of the Deed. It is further said that the question is not as to what the Deed purported to give effect to, but whether there has been an amount of property paid to the appellant in respect of the Deed. Indeed, the Commissioner looked at the events that occurred in 1987 from the annual reports and they were the matters that he had relied upon in refusing the application of s 15A(1).

The nub of the appeal is whether the appellant derived any benefit in respect of the Deed. This in turn is centred on the words ``in respect of'' in s 15A(1). In
Ansett Transport Industries (Operations) Pty Ltd v Comptroller of Stamps [1983] 2 VR 305, McGarvie J considered the expression ``relating to'' at p 307:

``I start from the proposition that the expression `relating to' is wide enough to cover any of the matters and things relied on

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ATC 4563

here by the Comptroller. It can be demonstrated that in one way or another most things are related to most other things. See D. Hume, A Treatise of Human Nature, Book 1, 1739 Pt. 1, ss. 4 and 5. That however is only the first step in the process of construction:-

`To construe the words of a statute does not mean to find the dictionary meaning of the words out of context. To construe the words of a statute means to find the legal meaning or effect of the words in the context in which they are found and in the context of the law': E.A. Driedger, The Meaning and Effect of the Bill of Rights: A Draughtsman's Viewpoint (1977), 9 Ottawa Law Review 303, at p. 308.''

His Honour continued at 308:

``In my opinion Parliament did not intend the words `relating to' in s. 17(4) to have their widest possible meaning and it is necessary to ascertain what limited meaning they have in their context: cf.
State Government Insurance Office v. Rees (1979) 144 C.L.R. 549, at pp. 553-4 and 560-1.

...

I think that two considerations support this limited construction of the word `relating'. The first is that there is a great deal to be said for construing this recent legislature provision in its popular sense. In
Grenfell v. Commissioners of Inland Revenue (1876), 1 Ex. D. 242, at p. 248, Pollock, B. said: `As to the construction of the Stamp Act, I think it was very properly urged that the statute is not to be construed according to the strict or technical meaning of the language contained in it, but that it is to be construed in its popular sense; meaning, of course, by the words ``popular sense'' that sense which people conversant with the subject matter with which the statute is dealing would attribute to it.'''

In my view, the expression ``in respect of'' requires a fairly direct relationship between the benefit and the instrument, otherwise there is no line drawn as to the ambit of its application. So, in the context of s 15A, when sub-s (1) refers to benefit passing or being carried into effect it means pursuant to that particular instrument and that is the Deed and not what has occurred by reason of some other instrument or transaction. In the instant case the Commissioner relied upon events which happened in 1987 relating to the letter of agreement upon which stamp duty had already been adjudicated.

If the Act imposes duty on instruments which effect a benefit and when it can be demonstrated that that benefit has not been and will not be effected, it is only fair and just that the instruments be exempted from duty. In the instant case the Deed having been rescinded could no longer be effected and yet the Commissioner still looked to the events of 1987 and refused to apply the relief granted in s 15A.

In my view, the Commissioner has erred in law in considering that the issue of shares and the acquisition of the joint venture interests were a benefit said to be effected in respect of the Deed. That cannot be legally feasible because the events that happened in 1987 had occurred one year before the Deed came into existence. Furthermore, rightly or wrongly, a nil duty had already been imposed by the Commissioner upon the matters arising from the letter of agreement and it would not be open to the Commissioner, at law, to further impose duty upon the same subject matter which had arisen from that instrument.

The Commissioner had raised certain questions for the consideration of the court and they are as follows:

``(a) As at 12th December, 1990, had the Deed been rescinded, annexed (sic), discharged or cancelled?

(b) As at 12th December, 1990, had each matter contained in the Deed or to which the Deed related not been carried into effect?

(c) As at 12th December, 1990 was it the case that each matter contained in the Deed or to which the Deed related would not be carried into effect?''

The significance of 12 December 1990 is said to be that it was the date on which the Commissioner determined and rejected the appellant's request for rebate pursuant to s 15A.

The appellant's counsel on the other hand has raised the following questions:

1. Did the Commissioner err in the application of s 15A of the Stamp Act on the facts before him?

2. If the answer to question 1. is yes, is the appellant entitled to a rebate of duty on the facts before the court?

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ATC 4564

The two sets of questions asked concerned matters which have to be considered in the course of the appeal, in any event. However, I am of the view that the questions posed by the appellant are more appropriate for the resolution of the appeal, being the crux of the appeal.

I am satisfied on the whole of the evidence before the court that the Commissioner had erred in law in applying the two limbs of s 15A(1)(a), and by so doing he had taken into account a matter which was irrelevant to the exercise of his discretion. He ought to have found that the Deed had been rescinded, and having so found that the Deed had been rescinded, he ought not to have considered the second limb of s 15A(1)(a). I find that he further erred in not being satisfied of the rescission of the Deed, having noted and accepted that the parties had agreed to rescind the Deed. The Deed having been rescinded on 24 September 1990, no benefit was or would be obtained by the appellant under the Deed. I am further satisfied that the Commissioner erred in law by attributing the effects of the letter of agreement to the Deed.

It is clear on the authority of University of Western Australia v Commr of State Taxation (WA) 88 ATC 4020 at 4025 that the Commissioner's decision is liable to review if he has erred in the exercise of his discretion and it is then for the court to exercise the relevant discretion on the material before it.

Considering all the circumstances of the case and the evidence before the court, I am of the view that the requirements of s 15A(1) have been satisfied and therefore no duty is payable on the Deed pursuant to s 15A(7) and (8) of the Act. My answers to the questions raised by the appellant are:

question 1 - yes.

question 2 - yes.

I will therefore allow the appeal and hear the parties as to the terms of the order to be made.