CAMPBELLS HARDWARE & TIMBER PTY LIMITED v COMMR OF STAMP DUTIES (QLD)

Judges:
Fitzgerald P
Davies JA
Fryberg J

Court:
Queensland Court of Appeal

Judgment date: Judgment given on 27 February 1998

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Fitzgerald P

This is an appeal from a judgment in the Trial Division dismissing an application for judicial review pursuant to the Judicial Review Act 1991 [ reported at 96 ATC 4348]. The appellant has challenged decisions by the respondent Commissioner of Stamp Duties requiring the appellant to pay additional stamp duty in respect of a transaction the subject of two inter-dependent agreements dated 21 December 1992. The Commissioner issued an amended assessment on the basis that the appellant acquired or agreed to acquire trading stock valued at $20,471,207 in the transaction. The trial judge held that, in ``substance'' although not in ``form'', the appellant agreed to acquire such trading stock in the transaction, and upheld the Commissioner's assessment of conveyance duty on the value of that trading stock pursuant to s. 54A of the Stamp Act 1894.

Under one of the agreements, the ``Sale of Business Agreement'', the appellant purchased the goodwill, specified plant and equipment and other assets associated with retail hardware shop businesses formerly conducted by subsidiaries of James McEwan Limited (Receiver & Manager Appointed). It was not disputed by the appellant that the Sale of Business Agreement was an ``acquisition of a business'' or an ``agreement to acquire a business'' for the purposes of s. 54A, and the prescribed Form S(a) was delivered to the Commissioner. Clause 7 of the Sale of Business Agreement contained an acknowledgment by the appellant that the trading stock remained the property of the vendors ``and is not included in the Assets acquired... under this Agreement'', and the Form S(a) stated that the value of the trading stock acquired or agreed to be acquired was ``nil''.

The other agreement, the ``Agency Agreement'', contained detailed provisions with respect to trading stock. Broadly summarised, that agreement recited that each vendor owned ``Trading Stock'' which it wished to dispose of ``as part of its business'', that the appellant had agreed to act as agent of each vendor ``for the purpose of effecting the disposal of the Trading Stock'' on the terms set forth in the Agency Agreement, and that the Receiver had agreed to act as ``Collection Agent'' for each vendor ``in respect of the receipt of moneys from the [ appellant] and the payment and repayment of moneys to the [

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appellant]''. The term ``Trading Stock'' was defined by cl. 1.1 to mean ``the trading stock of the Business [ of each vendor] as at the close of business on the Completion Date...''. It will be necessary in due course to refer to other defined terms in the Agency Agreement and the Sale of Business Agreement; by cl. 1.2(a) of the Agency Agreement expressions defined in the Sale of Business Agreement (curiously referred to in the Agency Agreement as the ``Business Purchase Agreement'') have the same meanings in the Agency Agreement. Thus, for example, cl. 1.1(u) of the Sale of Business Agreement contains a formula for the determination of the ``Completion Date'' for the purpose of both agreements.

By cl. 2 of the Agency Agreement, each vendor and the Receiver appointed the appellant ``as its agent for the purpose of disposing of the Trading Stock''. Clause 3 contained an acknowledgment by the appellant that, from the Completion Date, it would hold the trading stock ``as bailee for the Vendors on a consignment basis'' and, until delivery to a purchaser, store the trading stock at its risk, keep it adequately insured, and ``account to the Vendors for any proceeds of that insurance as soon as practicable after they become available, as if such proceeds constituted the proceeds of disposal of that Trading Stock''. Subject to its obligation to account to each vendor in accordance with the Agency Agreement, the appellant was given the same powers to deal with the trading stock for the benefit of the vendors as it had in respect of its own stock, including power to sell to one or more of its related corporations; it also was given power ``to sell any part of the Trading Stock to itself''. Further, subject to qualifications discussed below, if any of the trading stock had not been sold by the appellant ``on behalf of the Vendors as at the Final Adjustment Payment Date'', <sup>[1]</sup> The Agency Agreement contained a formula for determining the ``Final Adjustment Payment Date''. the appellant was required to ``procure'' one or more of its related corporations or some other ``reputable person'' to purchase that trading stock at that time.

Although the provisions of the Agency Agreement with respect to payment are complex and not easily summarised, in essence the appellant was required to pay, and the vendors to accept, the value of the trading stock at the completion date, subject to adjustments. Provision was made by cl. 8 for the appellant to ``advance to the Vendors... $17,500,000, being the estimated Trading Stock Value on the Completion Date''. Clauses 8 and 9 further provided for $2,000,000 of that sum (the ``Stock Deposit'') to be invested by the Receiver in an interest bearing account, and for payments to be made from that fund (with corresponding interest) to the vendors and the appellant according to their respective entitlements as the adjustments process was implemented.

Clause 8 provided for a stocktake, and the determination of the value of the Trading Stock on the Completion Date in accordance with Schedule 2, by which value was related to ``actual free in store cost thereof [ exclusive of certain specified costs] on a `last in-first out' basis'', adjusted for ``damaged stock, obsolete stock and slow moving stock'' and ``reduced, in accordance with the accounting methods and practices previously adopted by the Vendors, to take account of estimated supplier rebates and incentives but... not... adjusted for financial discounts taken on settlement''. Depending upon whether the trading stock value exceeded or was less than the amount which had been advanced by the appellant, a further advance was required of the appellant or a repayment was required from the vendors to the appellant. Whichever was the case, provision was made for resort by the appellant or the vendors first to their respective entitlements in respect of a Deposit which had been established under the Sale of Business Agreement ``on the same basis as for adjustments to the Purchase Price [ under the Sale of Business Agreement] payable to that party'', next to the Stock Deposit, and finally to the party's other funds.

Provision was also made for adjustments in respect of ``Excluded Stock'' and ``New Stock'', concepts both related to the possibility of ``Excluded Sites''. Various of the sites on which the vendors' businesses were conducted were leased, with the attendant possibility that necessary lessors' consents to the assignment of existing leases might not be forthcoming and new leases might not be available. Subject to the appellant's entitlement to terminate the agreements in specified circumstances (Sale of Business Agreement, cl. 8.6), provision was made for the exclusion of ``Site Leases'' if an assignment of an existing lease or a grant of a new lease could not be obtained by a specified date, with different consequences dependent on the category of the excluded Site Lease (Sale of

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Business Agreement, cl. 8.7). The Agency Agreement included elaborate provisions in respect of Trading Stock at an ``Excluded Site'' which, by cl. 27 of that Agreement, meant any ``Category B Site'' or ``Category C Site'' excluded from the sale pursuant to cl. 8.7 of the Sale of Business Agreement; cl. 27 also provided that the ``Exclusion Date'' was the date a site became an Excluded Site.

By cl. 1.1 of the Agency Agreement, ``New Stock'' was defined to mean ``trading stock purchased by the [ appellant] for sale at an Excluded Site as at the close of business on an Exclusion Date...''. Clause 27 was headed ``Reverse Agency Arrangement in respect of New Stock'', and cl. 27.1(a) required the Vendors to ``act as agent for the [ appellant] for the purposes of disposing of such New Stock on the same terms mutatis mutandis as applied in respect of the stock agency created under clause 2 in respect of the Trading Stock'', and sub-cll. 27.2, 27.3 and 27.4 provided:

``27.2 Clause 27.1 shall only apply in respect of New Stock up to the value of Trading Stock which was situated at (or in transit to) the Excluded Site at the Completion Date which has been sold by the Stock Agent between the Completion Date and the Excluded Date (`Sold Trading Stock').

27.3 For the purposes of this clause 27 the New Stock Value shall be determined as at the Exclusion Date of an Excluded Site in accordance with the provisions of clause 8.2 and Schedule 2.

27.4 If at an Exclusion Date the New Stock in respect of an Excluded Site exceeds the value of Sold Trading Stock, the [ appellant] shall be entitled, at its own cost and expense to remove New Stock with a value up to or equal to the amount of the excess, and/or to take Trading Stock in exchange for any part thereof.''

Clause 28 of the Agency Agreement dealt with the position in respect of Trading Stock (other than ``New Stock'') at an Excluded Site as follows:

``28. PARTIAL DISCHARGE OF AGENCY ARRANGEMENT

28.1 If, pursuant to clause 8.7 of the Business Purchase Agreement any Category B Site or Category C Site becomes an Excluded Site, then:

• (a) the parties shall as soon as practicable conduct a stocktake of Trading Stock situated at the Excludcd Site as at the Exclusion Date (the `Excluded Trading Stock'), for the purposes of calculating the Trading Stock Value as at the Exclusion Date (such stocktake to be conducted in accordance with the procedures in Schedule 2);
• (b) the stock agency created under clause 2 of this Agreement shall terminate as from the Exclusion Date to the extent that it related to Excluded Trading Stock, but without prejudice to any Trading Stock, which is not at that time Excluded Trading Stock;
• (c) subject to paragraph 28.1(d), the [ appellant] shall deliver the Excluded Trading Stock to the [ Receiver] at the cost of the Vendors and at such time and place as is reasonably agreed by the [ appellant] and the [ Receiver] as being appropriate; and
• (d) upon delivery of the Excluded Trading Stock, the [ Receiver] shall (for and on behalf of the Vendors) refund to the [ appellant] such part of the Warranted Amount advanced to the [ Receiver] pursuant to clause 8.1 which related to the Excluded Trading Stock.''

By cl. 4 of the Agency Agreement, ``Warranted Amount'', the appellant warranted to the vendors that, subject to cl. 28(1)(d), they would ``in aggregate receive from the disposal of the Trading Stock an amount being the aggregate amount required to be advanced to the Vendors under cl. 8''. By cl. 5, the appellant was required to bear all costs incurred by it in performing the Agency Agreement, ``including, without limiting the foregoing, packaging, freight insurance, taxes and charges imposed with respect to the sale of Trading Stock to third parties''. Clause 6 ``... Commission'', and cl. 7 ``Insufficient Proceeds from the Disposal of Trading Stock'', respectively provided:

`` [ 6] For its services under this Agreement, the [ appellant] shall be entitled to a commission equal to the amount by which the net proceeds of disposal of the Trading Stock exceed the Warranted Amount in respect of the Trading Stock.

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ATC 4277

[ 7] Subject to clause 17, if the Warranted Amount exceeds the net proceeds of sale of the Trading Stock received by a Vendor (directly or by the [ appellant] as its agent), the [ appellant] shall bear the deficiency and the deficiency shall be set off against the Advanccs so that the Vendors shall have no obligation to repay the Advanccs represented thereby.''

The term ``Warranted Amount'' was defined in cl. 1.1 as follows:

• ``(a) in respect of the Vendors, means the amount referred to in clause 4; and
• (b) in respect of the [ appellant], means the amount corresponding to that referred to in clause 4 so far as it relates to the [ appellant] by virtue of clause 27.''

Consistently with cll. 4.6 and 7, cl. 10 provided:

``10. Application of Proceeds of Sale

The [ appellant] shall be entitled to receive the proceeds of disposal of the Trading Stock and to intermingle those proceeds with its own moneys unless the [ appellant] is in default in making any Advance to the Vendors or in paying the Warranted Amount. The [ appellant] shall apply the proceeds first in repayment of Advances and second in satisfaction of the [ appellant's] commission.''

(The word ``repayment'' seems inapposite, since the Advances (defined by cl. 1.1 to mean an advance referred to in cl. 8) were required to be made by the appellant to the Vendors.)

Clauses 11, 14.1(c) and (d), 14.2 and 17.2 of the Agency Agreement respectively provided:

``11. NATURE OF ADVANCES

...

• (a) Advances made by the [ appellant] to the Vendors shall not bear interest;
• (b) the amount of such Advances shall be set off against the obligation of the [ appellant] to account for the proceeds of disposal of the Trading Stock to the Vendors; and
• (c) the only obligation of the Vendors in respect of repayment of Advances shall be as set out in clauses 8, 9 and 10 or to the extent (if applicable) that despite clause 3 the Vendors receive the proceeds of sale of any Trading Stock direct.''

``14. INDEMNITY IN RESPECT OF CONDUCT OF [ APPELLANT]

14.1 Subject to clause 17, the [ appellant] hereby agrees to indemnify and keep indemnified the Vendors and Receiver and each of them in respect of any costs, cxpenses, damage, injury or loss suffered or incurred by any or all of the Vendors or the Receiver:

• ...
• (c) resulting from any breach of or failure by the [ appellant] to fulfill any of the contracts or orders... referred to in sub-clause 14.2 of the [ Sale of Business] Agreement (such contracts or orders being in respect of Trading Stock) occurring after the Completion Date; and
• (d) resulting from the sale of any Trading Stock (including without limitation any product liability claim or claim that Trading Stock is defective in any way).

14.2 The Vendors hereby:

• (a) to the extent permissible by law, assign to the [ appellant]; and
• (b) otherwise agree to hold on trust for the benefit of the [ appellant], as from Completion, the benefit of any manufacturers' and suppliers' warranties and guarantees then current and available to the Vendors in respect of any item of Trading Stock.''

``17. WARRANTIES

...

17.2 Subject to clause 17.3, from the Completion Date the Vendors and the Receiver shall:

• (a) indemnify the [ appellant] against all losses, costs and expenses which may reasonably be incurred by the [ appellant] in relation to any Claims;
• (b) in consultation with the [ appellant], be entitled to conduct any proceedings with respect to the Claims in the name of the [ appellant] and to negotiate, settle, compromise or litigate as they in their absolute discretion think fit; and
• (c) keep the [ appellant] informed as to the progress of any Claims and (if reasonably practicable) of any action

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  ATC 4278

  which they propose to take in relation to the Claims.''

``Claims'' was defined in cl. 1.1 to mean ``any action by a supplier of the Business alleging conversion by the [ appellant], the Receiver or the Vendors of any Trading Stock which is subject to claims for retention of title as at the Completion Date''.

Other clauses, of lesser importance, which were referred to in argument included cl. 8.2 by which the appellant was required to allow the Vendors and Receiver to examine and review the appellant's stock control systems; cl. 12, under which the appellant was required to give the Receiver regular written reports of sales; and cl. 15, which permitted the Vendors and the Receiver to inspect the sales sites and business records of the appellant.

Finally, cl. 30 provided:

``30. CONTINUATION OF TRADING STOCK SECURITIES

30.1 The Receiver undertakes to the [ appellant]... that the Senior Securities (to the extent that they affect the Trading Stock) (`Trading Stock Securities'), shall not be discharged or otherwise released or waived or varied or assigned (other than subject to the rights of the [ appellant] and the [ Receiver] under this Agreement) at any time whilst:

• (a) the agency created under clause 2 of this Agreement continues in respect of any of the Trading Stock; and
• (b) whilst any Advances made by the [ appellant] to the Vendors are still outstanding, not being repaid or discharged in accordance with this Agreement.

30.2 The Receiver and the Vendors agree that during the period described in clause 30.1, any proceeds from enforcement of the Trading Stock Securities shall be applied:

• (a) firstly, to the Vendors to the extent of the Warranted Amount and by way of pro tanto satisfaction of the Advances; and
• (b) secondly, to the [ appellant] to the extent of the balance (if any) and by way of commission in accordance with clause 6.

30.3 The Vendors warrant and represent to the [ appellant]... that during the period described in clause 30.1 none of them shall seek or otherwise obtain any discharge, release or waiver or seek or accept any variation or assignment of any Trading Stock Security (other than subject to the rights of the [ appellant] and the [ Receiver] under this Agreement).''

Although the property sold under the Sale of Business Agreement was released from all securities at completion, the trading stock remained subject to fixed and floating charges and the Receiver was a party to the sale of the trading stock (whether to or by the appellant) under the Agency Agreement.

According to the appellant, it neither agreed to acquire nor acquired any trading stock, and property in the trading stock the subject of the transaction did not pass to it when the agreements were made, or implemented, or at any time; property in the trading stock the subject of the transaction when sold by the appellant passed directly from the vendors to purchasers from the appellant as agent for the vendors. The Commissioner's principal argument to the contrary, which found favour below, is that the agreements constituted a sale of the trading stock by the vendors to the appellant.

Two further arguments based on the construction of s. 54A of the Act were also advanced by the Commissioner. I do not propose to discuss these arguments, which were not elaborated on, in detail. One proceeded on the footing that, by the Agency Agreement, the appellant had acquired or agreed to acquire an equitable interest in the trading stock, while the other contended that the interest was as bailee ``or otherwise''. It was submitted not only that s. 54A has application in relation to such limited interests in goods ``appertaining to'' a business which is acquired or agreed to be acquired but that, in such circumstances, duty is required to be calculated and paid not by reference to the value of the property interest acquired or to be acquired in the goods but by reference to the goods' full unencumbered value. The last step, at least, is wholly untenable, and the decisions referred to are of no assistance to the Commissioner.

However, these were not matters which influenced the trial judge's decision. His Honour said [ 4351-4352] that, despite the terminology,

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``... some features of the [ Agency] Agreement point to sale, rather than agency, as the essence of the relationship. That the risk of accidental loss is borne by the applicant is one. ^[2] Knoblauch v. McInnes [ 1935] St R Qd 28 . This factor is not as significant as once it was in indicating whether property in goods has passed: cf. K. Sutton, Sales and Consumer Law , 4th ed (1995) p. 416, where it is pointed out that common retention of title clauses invariably state that the risk passes to the buyer. Clause 3(b), it may be noted, does not entitle the vendor to the proceeds of an insurance policy. On accidental destruction, the applicant is so entitled because it has the right to the proceeds of disposal of all the stock: see cl. 10. Another is that inevitably the applicant would sell to a multitude of purchasers in its own name and in circumstances where a purchaser would not be aware that the goods were other than the applicant's property. ^[3] Restatement of the Law 2nd on Agency (1958) § 14J at 74. Clause 14.2, incidentally, contains a promise by the vendors to assign to the applicant, or else hold on trust for it, the benefit of any manufacturers' warranties. It is not easy to see the point of this obligation if the Agency Agreement was intended to bring the vendors into contractual relations with the customers of the stores. That the applicant must pay for the rights acquired in relation to the stock at fixed times and irrespective of the extent of any retail sales is another, albeit slight, indication that the applicant may have got the stock as its own. ^[4] Gannow Engineering Co Ltd v. Richardson [ 1930] NZLR 361 , 369 ; Firestone Tire at 487; Towle & Company v. White (1873) 21 WR 465 , 466 ; Williston on Sales 4th ed (1973) § 2-1. And although an agent can be remunerated by the surplus beyond a price received for the principal, ^[5] Re Stephanian's Persian Carpets Limited (1980) 34 CBR 35 , 39 ; Buckland v. Clarke [ 1956] SR (NSW) 185 , 187 ; Ex parte Bright, In Re Smith (1879) 10 Ch D 566 ; Bowstead on Agency 15th ed (1985) p. 21. still it is `evidence towards a sale that the recipient is entitled to sell at whatever price he thinks fit, accounting to the supplier for only a pre-determined sum'. <sup>[6]</sup> Benjamin's Sale of Goods 4th ed (1992) para. 1-049; cf Chickering v. Bastress 22 NE 542 , 543 (Ill, 1889) ; Paul Martin Co Inc v. Sumpter 64 A 2d 425 , 426-427 (CA DC, 1949) . Other things indicate more distinctly that the applicant contracted to get the stock for its own purposes, free of any residual right or interest in the goods in the vendors, and so agreed to `acquire' it.

The amplitude of the applicant's dominion after completion is not left to inference. By cl. 3, the applicant has the same power `to deal with' the trading stock as in relation to its other stock, which must comprehend a right to sell in its own name. True it is that the power is expressed to be `for the benefit of the vendors'; but these words serve no function because the vendors' entitlements are not affected by any dealing in the stock by the applicant. The vendors get a sum of money unrelated to the destiny of the goods. More importantly, at completion the applicant took possession with the right ^[7] As against the vendors. The possession might have been interrupted by secured creditors. to it indefinitely, entirely free of the vendors' control. The vendors retained neither a dispositive right in respect of the stock nor any power to direct dealings by the applicant in the goods. Although the applicant could have insisted on returning stock on the occurrence of an event contemplated by cl. 8.7 of the Sale of Business Agreement, on no contingency could a vendor have demanded the goods back or controlled their fate. ^[8] The absence of any right in the goods after completion contrasts with retention of title clauses often found in contracts for the sale of goods. Commonly they not only assert retention of title pending payment of the price but also reserve rights to repossess or to dispose of the goods in the meantime: cf. Clough Mill Ltd v. Martin [ 1985] 1 WLR 111 , 114-115 ; Hendy Lennox (Industrial Engines) Ltd v. Grahame Puttick Ltd [ 1984] 1 WLR 485 , 492 ; NE Palmer, Bailment , 2nd ed (1991) pp. 132-133, 177-178. See also Professor D. Everett's interesting article, ``Romalpa Clauses: The Fundamental Flaw'', (1994) 68 Australian Law Journal 404.

It is `characteristic of ownership that an owner has a residuary right in the thing owned'. <sup>[9]</sup> A.M. Honor é , ``Ownership'', in A.G. Guest (ed), Oxford Essays in Jurisprudence , (1961) p. 127; see too G.W. Paton, A Text-Book of Jurisprudence , 3rd ed (1964) p. 469; R.M.W. Dias, Jurisprudence , 5th ed (1985) pp. 297-299; A.P. Bell, Modern Law of Personal Property in England and Ireland , (1989) pp. 67, 74; Restatement of the Law of Property (1936) § 10 c, p. 25. Here, however, the applicant was entitled to exclusive possession of the stock permanently, and in circumstances where the vendors were `contractually disabled... from enforcing any right of property against the person receiving delivery'. ^[10] Per Dixon J in Chapman Bros v. Verco Bros & Co Ltd (1933) 49 CLR 306 , 318 ; cf. Farnsworth v. FC of T (1949) 9 ATD 33 , 40; (1949) 78 CLR 504 , 518 ; The South Australian Insurance Co v. Randell (1869) LR 3 PC 101 , 109 ; S. Gageler, ``Retention of Title Clauses'', (1989) 2 Journal of Contract Law 34, 36-38. The vendors agreed to give possession of the goods and to the extinguishment of all their rights in them. In other words, in substance though not in terms, it was agreed that the applicant should become the new owner.''

Thereafter, an argument that the existence of the Trading Stock Securities was inconsistent with an acquisition by sale by the appellant was rejected; his Honour said [ 4352]:

``... The securities involved, I suppose, a potential to affect the volume of stock available to the applicant and therefore the aggregate price payable. But neither the existence nor the prospect of enforcement of the securities matters to the conclusion that the applicant agreed to get the stock as its own.''

A difficulty which I have with the approach which the trial judge adopted is that, while the parties' description of their transaction or relationship cannot deny its legal character according to the terms of their agreement, ^[11] See, for example, Radaich v. Smith (1959) 101 C.L.R. 209 . in the absence of any suggestion of sham the character of the transaction or relationship is determined by the legal effect of the agreed terms. ^[12] Commr of Stamp Duties (N.S.W.) v. Pendal Nominees Pty Limited & Anor 89 ATC 4207 , 4217; (1989) 167 C.L.R. 1 , 20-21 . The indicia to which his Honour pointed, which - together perhaps with some others - were also relied on by the Commissioner, would be conclusive of the parties' intention with respect to the transfer of property in, and ownership of, the trading stock in the absence of any stated intention. However, none of the aspects of the agreements referred to seem to me to be sufficient, alone or in combination, to support a conclusion that the trading stock was agreed to be acquired by the appellant despite the parties' express agreement to the contrary. ^[13] Contrast Narich Pty Ltd v. Commr of Pay-roll Tax 84 ATC 4035 , 4042; (1984) 58 A.L.J.R. 30 , 35 . Put somewhat differently, I can find no sufficient basis in the terms of the agreements for rejecting the parties' stated intention concerning the nature of the transaction, including both the relationship between them and the ownership of the trading stock. ^[14] cf. Caltex Oil (Australia) Pty Ltd v The Dredge ``Willemstad'' (1976) 136 C.L.R. 529 , 561 ; McEntire v. Crossley Bros Ltd [ 1895] A.C. 457 . In my opinion, the appellant did not agree to acquire the trading stock by the Sale of Business Agreement and the Agency Agreement.

No different answer is required by a doctrine that substance prevails over form in revenue

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ATC 4280

cases. ^[15] Australian National Airlines Commission v. Commr of Stamp Duties 89 ATC 4218 , 4222; [ 1989] 1 Qd.R. 246 , 250 . At least where there is a general provision aimed at revenue avoidance, ^[16] In this instance, s. 81 of the Stamp Act . revenue must be calculated by reference to the legal nature and effect of a document or transaction, not its commercial or practical consequences. ^[17] John v. FC of T 89 ATC 4101 ; (1989) 166 C.L.R. 417 .

It does not necessarily follow that the appellant did not acquire the trading stock.

Following completion, the trading stock that the appellant received pursuant to the Agency Agreement became mixed with, and could not be separately identified or distinguished from, the appellant's other trading stock. Further, although perhaps less importantly, at least after it became known that there would be no excluded sites and no trading stock to be returned to the vendors, the trading stock received by the appellant under the Agency Agreement was recorded as an asset of the appellant in its financial records, and it seems that no attempt was made to implement the accounting mechanisms for which the Agency Agreement provided. Once the appellant was unable to return the trading stock received under the Agency Agreement to the vendors, the factors relied on by the trial judge and the Commissioner to support a conclusion that that agreement constituted an agreement by the appellant to acquire the trading stock assume a new significance. Under cl. 3, the appellant was empowered to sell the trading stock to itself, which, in context, merely required an exercise of ownership rights in respect of the trading stock, since such a ``sale'' required no different or additional payment to the vendors or the Receiver. Subject to one matter, there is a clear line of authority in favour of the view that, regardless of the parties' intention at that point, the appellant had acquired the trading stock. ^[18] The South Australian Insurance Co v. Randell L.R. 3 P.C. 101 , 109 ; Chapman Bros v. Verco Bros & Co. Ltd (1939) 49 C.L.R. 306 , 314, 316, 318, 319 ; Farnsworth v. FC of T (1949) 9 ATD 33 , 40; (1949) 78 C.L.R. 504 , 518 . It is of no present consequence whether or not the vendors had an equitable interest in, or a claim in specie in respect of, the body of mixed stock: cf. Brady v. Stapleton (1952) 88 C.L.R. 322 , 336-339 .

The appellant submitted that property in the trading stock could not pass to the appellant because of the securities over the stock which were not released at completion, and that it was only as agent for the Receiver that the appellant could give title to a third party. However, the securities are of little significance in the resolution of this case. Because the Receiver and the vendors were parties to the transaction with the appellant, there was, in my opinion, no obstacle to the appellant acquiring ownership of the trading stock as a consequence of the transaction; once again, emphasis is given to the weakness in the appellant's argument by its power under cl. 3 to sell the trading stock to itself.

In my opinion, therefore, the Commissioner is entitled to succeed on this appeal, subject to the validity of the material portion of s. 54A of the Act and to a further argument raised by the appellant, to which I will shortly turn. In the circumstances, there is no need to discuss the Commissioner's reliance, in the alternative, on s. 81 of the Act. ^[19] Discussed in Re Quetel Pty Ltd and Commr of Stamp Duties (Qld) 91 ATC 4771 ; [ 1993] 2 Qd.R. 57 .

The further question arose concerning the liability for the additional duty because of the course of assessment and reassessment followed by the Commissioner.

The statement in Form S(a) showing the value of Trading Stock as ``nil'' was dated 3 August 1993 and assessed for stamp duty on that basis on or about 9 September 1993. The duty then assessed was paid on 30 September 1993. Following an investigation, the Commissioner altered the statement in Form S(a) to include the value of the trading stock acquired by the appellant, and, having formed the opinion that the amount of duty payable on the statement had been assessed at an insufficient amount, he reassessed the duty and issued a notice of assessment dated 19 May 1995 for the additional duty.

The appellant submitted that the course adopted was not authorised by the provisions relied on by the Commissioner, ss. 22A and 80. It was contended that amendment, with a reassessment, was not possible after the form had been assessed in its unamended state and the original assessment was correct according to the contents of the form at that time.

The Commissioner's power to amend the Form S(a) delivered to him by the appellant in purported compliance with s. 54A is to be found in sub-s. 22A(2)(a), and sub-s. 22A(2)(b), does not appear to authorise a reassessment following amendment. However, sub-ss. 80(1) and (2) provide powers of reassessment in wide terms which are ample to cover the present case; the words ``subject to this section'' in the sub-section are of no present application.

Even if the Commissioner must depend on sub-s. 80(2), it is in my opinion adequate for his purpose. The point at which it must be ascertained whether the duty payable on the Form S(a) has been assessed at any insufficient amount is after it has been amended and the question of reassessment first arises. Such a

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ATC 4281

construction is within the literal terms of the Act, and plainly accords with the likely legislative intention, which would be defeated by the artificially narrow approach advanced by the appellant.

It is unnecessary in this matter to consider whether the position might be different if the material provisions of the Act relied on by the Commissioner concerned the dutiability of a document at the time of its execution - as is usual - and not, as in this case, the dutiability of a transaction.

What has been said to this point would ordinarily require that this appeal be dismissed with costs to be taxed. However, after judgment was reserved in this matter and the High Court delivered judgment in Ha & Anor v. State of New South Wales & Ors , ^[20] 97 ATC 4674; (1997) 146 A.L.R. 355. the question was raised whether s. 54A of the Act is invalid, at least insofar as it is relied on by the Commissioner in this case. That question is to be removed into the High Court under s. 78A of the Judiciary Act 1903 (Cth.).

It might assist the High Court to know that, if s. 54A of the Stamp Act is valid, in the opinion of this Court the Commissioner is entitled to succeed. Accordingly, I would declare that, if s. 54A of the Stamp Act is valid, the decision appealed from is correct and the appellant should pay the taxed costs of and incidental to the appeal to this Court.