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High Court of Australia Transcripts |
Brisbane No B44 of 2002
B e t w e e n -
TRUST COMPANY OF AUSTRALIA LIMITED
Appellant
and
COMMISSIONER OF STATE REVENUE
Respondent
GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 5 DECEMBER 2002, AT 10.22 AM
Copyright in the High Court of Australia
MR D.G. RUSSELL, QC: May it please the Court, I appear with my learned friend, MR M.L. ROBERTSON, for the appellant. (instructed by Creagh Weightman Lawyers)
Your Honours, there is a technical matter relating to the nomenclature of the proceedings and our learned friends have an application to make in relation to that. It may be convenient for that to be dealt with first.
MR K.D. DORNEY, QC: If it please the Court, I appear with my learned junior, MR D. MARKS, for the respondent. (instructed by Crown Solicitor for the State of Queensland)
The application is as set out in the first three paragraphs of our - - -
GLEESON CJ: Is that opposed, Mr Russell?
MR RUSSELL: No, your Honour.
GLEESON CJ: Yes, we will make that order.
MR DORNEY: Yes, thank you, your Honour.
GLEESON CJ: Yes, Mr Russell.
MR RUSSELL: If the Court pleases, this is an appeal against an assessment of stamp duty brought by special leave.
KIRBY J: On your theory of the appeal, would it make the supervening legislation unnecessary?
MR RUSSELL: On our view of the matter, the 2000 amending legislation was unnecessary, yes, your Honour, except that the 2000 legislation, the Revenue Laws Amendment Act 1988 , did two things. It dealt with the situation where there was a conveyance, as here, to a custodian rather than to a responsible entity of a managed investment scheme. It also dealt with the situation where there was a transfer between a responsible entity and a custodian. That matter of course was a problem which remained and had to be resolved by legislation. So there was a need to deal with what I might compendiously call the introduction of the managed investment scheme legislation.
KIRBY J: Yes, thank you.
MR RUSSELL: The instruments which were assessed to duty and the assessments appear at page 143 of the appeal book.
KIRBY J: Page 43, is it?
MR RUSSELL: Page 143, your Honours. The proceeding in Queensland is still the old case stated procedure. So these documents are annexures to the Commissioner's case stated. The Court will see that there is assessed a contract of sale to which the parties are said to be Cromwell Property Securities Limited, which I will call Cromwell in my submissions, Riverfront Developments, which is referred to generally as the vendor.
GUMMOW J: Did you say page 143?
MR RUSSELL: Yes, your Honour.
GUMMOW J: Where is the contract?
MR RUSSELL: The contract commences at page 46, your Honour.
GLEESON CJ: I thought you were telling us where the dutiable instruments were.
MR RUSSELL: I am sorry, your Honour, the assessment. The dutiable instrument is appendix D to the case stated. It is at page 137 of the appeal book.
KIRBY J: How is your client described in that?
MR RUSSELL: As the transferee, your Honour. Item 5, Trust Company of Australia Limited.
KIRBY J: Who prepared that document, your client's solicitor?
MR RUSSELL: Certainly my client's solicitor signed it. In the normal course of conveyancing practice in Queensland, it would be prepared by the transferee's solicitors and submitted to the transferor for execution. As your Honours can see, there is a slight - - -
KIRBY J: Why would they not have described themselves as "Purchaser (Custodian)", if that is their theory of their status?
MR RUSSELL: The description, in fact, is the description prescribed by the Land Title Act in Queensland and it is "Transferor" and "Transferee". So you do not have a choice about that.
CALLINAN J: I think the form is in a schedule to the Act, is it not?
MR RUSSELL: Yes, your Honour.
CALLINAN J: This just follows the form, does it not?
MR RUSSELL: That is right, your Honour, but the issue is not that - - -
GLEESON CJ: I am not quite sure that what you said was accurate. On page 137 at line 35 your client's name appears under a heading "DETAILS OF TRANSFEREE/PURCHASER". Is the word "PURCHASER" crossed out? I am looking at page 137 of the appeal book, line 35.
MR RUSSELL: Yes, I see, I am sorry, your Honour. Yes, "DETAILS OF TRANSFEREE/PURCHASER".
GLEESON CJ: Does it follow that the duty of instrument describes your client as transferee/purchaser? That is slightly different from what you said a moment ago.
MR RUSSELL: I am sorry, I was referring to the previous page, your Honour, where your Honour will see that there is a description of parties as transferor and transferee.
HAYNE J: Well, can I inject a practical note, Mr Russell. My appeal book is entirely deficient. I do not have, as far as I can see, a large number of pages. How this has occurred I do not know, but how I am to follow your argument with a deficient appeal book I do not know. I do not have 137. I do not think I have the odd pages for the balance of the book.
KIRBY J: Perhaps Mr Robertson might make the supreme sacrifice.
MR RUSSELL: Yes, I think perhaps if we might - - -
GLEESON CJ: I actually have two appeal books.
MR RUSSELL: Your Honour, there was an appeal book and an amended appeal book and the distinction between the one page difference that your Honour has been addressing is the difference between the original appeal book and the amended appeal book.
HAYNE J: I now have the file copy, which is complete but not helpful.
MR RUSSELL: I am sorry, your Honour.
KIRBY J: On the point raised by the Chief Justice concerning transferee/purchaser, there is a reference there to a trust company and Cromwell.
MR RUSSELL: Well, Cromwell is simply given as the address for services and notices, your Honour.
GLEESON CJ: Yes, it appears it is care of Cromwell.
MR RUSSELL: Yes. And Cromwell was the responsible entity under the managed investment schemes and Trust Company of Australia Limited, the appellant, was the custodian. As your Honours can see, the only parties who executed the transfer on page 136 in the original appeal book and 137 in the amended appeal book, were the transferor and the solicitor for the transferee. That appears at the bottom of the page.
KIRBY J: Where is the transferee named - I see, yes, at paragraph 5.
MR RUSSELL: Yes, your Honour. At about line 25 on the page.
KIRBY J: Yes.
MR RUSSELL: The assessment appears at page 142 for those of your Honours who are working from the original appeal book and 143 for those of you who are working from the amended appeal book. The Court will see that two instruments are assessed in relation to this transaction. The first is the contract of sale with parties stated to be "Cromwell Property Securities Pty Ltd" and "Riverfront Developments Pty Ltd", and in the case of the transfer of real property the parties are said to be "Trustee Company of Australia Ltd", "Cromwell Property Securities Pty Ltd" and "Riverfront Developments Pty Ltd". That seems to us, with respect, to be wrong. The parties to the contract of sale, to which I take your Honours, were the three companies and the parties to the transfer were the two, not that we suggest anything flows from that.
KIRBY J: I missed that last statement.
MR RUSSELL: Not that we suggest this is crucial to the outcome, but the description of the parties is wrong. The three companies were the parties to the contract of sale and only two parties, Cromwell and Riverfront Developments, were parties to the transfer.
KIRBY J: Is that just a clerical mistake within the Office of State Revenue?
MR RUSSELL: We assume so, your Honour.
KIRBY J: Just going back to that point that you have just raised concerning page 137, "DETAILS OF TRANSFEREE/PURCHASER". Do you make any remarks on that? I do not remember reading that in the - - -
MR RUSSELL: We certainly have not made any submission in relation to that and it would not - as we apprehend the position, if we were not the purchaser as a matter of law for the purposes of section 54(6), so describing ourselves on a subsequent instrument would not avoid us incurring liability to - - -
GLEESON CJ: It just indicates that an earlier answer you gave was incorrect. You were asked how your client was described in the dutiable instrument and you answered that question "Transferee". Your client was in fact described as "Transferee/Purchaser" for whatever consequence that has.
MR RUSSELL: Yes. Your Honour, I am sorry, I was referring to page 136, in which it was described as transferee only. There is an inconsistent description, I must concede that. But it does not help us, I am afraid.
GLEESON CJ: In relation to this form of contract, Mr Russell, it appears at page 46 - this is what, a law stationer's form of contract?
MR RUSSELL: Yes, your Honour. As your Honour can see at the top of page 46, your Honour will see that it is a printed form, first edition, that has been:
Adopted by the Real Estate Institute of Queensland Limited and approved by the Queensland Law Society - - -
GLEESON CJ: Well, then, may I ask you about page 47. It has a special provision for reference to a custodian. I am personally not familiar with standard printed forms of contract of sale that have provision for a reference to a custodian. Is this some special form that is used in relation to special types of sale, or do all standard forms of contract of sale of land, at least, for commercial land, buildings and units in Queensland, have provision for a reference to a custodian? And if so, why?
MR RUSSELL: At the bottom of the page your Honour will see what appears to be a word processor reference on the bottom left-hand corner. The implication for that may be that the front pages - if one deals with pages 60 and following, your Honours will see that that is only a printed form which - - -
KIRBY J: Do the solicitors have this as a template in their word processors?
MR RUSSELL: That would appear, given the word processor reference, your Honour, to be true of pages 46 to 49 - - -
GUMMOW J: Page 50 is obviously a spoke annexure and it contains a definition of "custodian".
MR RUSSELL: And if your Honour looks at the word processor reference at the bottom of that page, your Honour will see it is part of the same series as the word processor references that appear at the bottom of pages 46 to 49. There are, of course, no such references on pages 60 to 71.
GLEESON CJ: Is this word "custodian" a term of art?
MR RUSSELL: Its terms so far as we can see, your Honour, comes from the Managed Investments Act.
GLEESON CJ: Does that mean that then to understand this contract you need to read it in the light of the Managed Investments Act? I am going to give up trying to help you after this, Mr Russell.
MR RUSSELL: Your Honour, one certainly needs, in our respectful submission, to understand the context created by the Managed Investments Act. That is dealt with in the judgment of the court below and we do not think either our learned friends or ourselves draw anything in relation to the Managed Investments Act other than what is said below.
KIRBY J: It is just, peaking for myself, you have the great pleasure and joy of being very familiar with this legislation. It is a joy that I have so far spared myself. If it is therefore relevant to understand the contract in light of the legislation, then I would appreciate at least a thumbnail sketch of how the legislation - - -
MR RUSSELL: The Court will find a summary of that in the judgment of Justice Helman. Perhaps at first there is the recognition by Justice Thomas at page 152 of the appeal book originally lodged, page 153 of the amended appeal book:
In relation to the acquisition of a property they simply followed the rather complicated requirements of the Corporations Law and the Managed Investments Act (Commonwealth) which are designed to protect members of the public in relation to managed investment schemes. Those provisions require the appointment of a "custodian" to hold the relevant property.
KIRBY J: What was the Commonwealth's head of power in this, the - - -
MR RUSSELL: The Corporations Law one imagines, your Honour. Why that was the case in relation to Cromwell is set out at pages 13 to 17 of the appeal book which contain its dealer's licence under the Securities Industry Act. The Court will see that on page 14 condition 10 of the licence imposes a condition on the licensee, which was Cromwell, and:
not to hold scheme property of a registered scheme but most appoint another person to hold scheme property unless -
and then there are a series of conditions.
GLEESON CJ: Does the legislation to which you are referring refer to a purchaser as well as a custodian?
MR RUSSELL: The Managed Investments Act 1926 ?
GLEESON CJ: Yes.
MR RUSSELL: I do not believe so, your Honour.
GLEESON CJ: It might be worth a check because it might be thought that if that concept is referred to in that legislation, it might have the same meaning as it has in the revenue legislation.
MR RUSSELL: Yes, except, your Honour, that the exemption that we are seeking does not use the term "custodian" at all. The term "custodian" was brought into the legislation by the 2000 amendment.
GLEESON CJ: I understand that, but I still would be interested to know whether the managed investments legislation refers to a purchaser and distinguishes between a purchaser and a custodian.
MR RUSSELL: Yes, certainly.
KIRBY J: This is just a case where the Commonwealth came barging in with its own legislation and used terms that did not fit neatly with the State legislation.
MR RUSSELL: The Commonwealth no doubt felt, your Honour, that there were eight State Stamp Duties Acts, and for it to have to deal with each of those and draft its legislation accordingly was a bit difficult. It may well be too that the Commonwealth had in mind that this is a problem that on no view could arise in New South Wales. On no view it would arise in Victoria because Victoria does not advance the taxing point. It could only arise in those States where the term "purchaser" is used which, as we pointed out in our submissions, in corresponding provisions are Queensland, Western Australia and South Australia. So it may well have been that those members of the Commonwealth Parliament from Queensland, Western Australia and South Australia did not think to point the matter out when they were considering the legislation.
KIRBY J: They may never have heard of it.
MR RUSSELL: Yes. It is perhaps appropriate to take your Honours then to the objection which was lodged. That is page 144 of the original appeal book, 145 of the amended appeal book. Grounds 1, 2, 3 and 4 are not relied on here. The issue really is the issue raised by paragraph 7. Paragraphs 4,5 and 6 simply set out what we say were the reasons why the Commissioner should have been satisfied that the conditions for eligibility of section 54(6) were met.
KIRBY J: You said 4, 5 and 6. I thought 4 was - - -
MR RUSSELL: Sorry, 5, 6 and 7, your Honour. The Commissioner's disallowance of the objection is the following document starting at page 146 of the original appeal book, 147 of the amended appeal book. The decisions in relation to grounds 5, 6 and 7 are set out on page 149 of the original appeal book and page 150 of the amended appeal book. Your Honours will see at line 22 that ground 5 is said to be "Agreed", at line 27 that ground 6 is said to be "Agreed". At ground 7 it is said:
I disagree for the reasons given above.
Those reasons we apprehend are those contained in the paragraph beginning at line 10 on the same page:
In relation to your comments regarding 54(6) of the Act, the Contract of Sale was not assessed until 27 March 2000 and accordingly section 54 of the Act could not have been applied to the Transfer as at 3 December 1999.
So the argument that is there put is that the contract of sale was stamped after the transfer and therefore, since the entitlement to the exemption is that you have paid duty on the contract of sale, we do not qualify. Our learned friends, as I understand it, do not rely on that any more and the grounds as put in the case stated were different.
GLEESON CJ: Could I ask you a question about a matter we were talking about a little earlier, and that is the contract on page 46 line 10. It says:
This contract is made between the Vendor and the Purchaser.
The vendor, on the following page, is identified as Riverfront Developments. The purchaser is identified as Cromwell Property Securities and there is, as we noted earlier, a separate reference to a custodian. When it says the contract is made between the vendor and the purchaser, should we understand that to mean not the custodian?
MR RUSSELL: No, your Honour, the statement is factually wrong. All three parties executed the contract. I will take your Honour to the execution page. It is common ground between us that obligations were created in respect of all three of them.
GLEESON CJ: What are the obligations undertaken by the custodian?
MR RUSSELL: We have set them out in our outline, but the key one to which we refer, of course, is the obligation to take a conveyance.
GLEESON CJ: I am just trying to understand what appears on page 46 at line 10. It looks as though it may be relevant to your argument.
MR RUSSELL: It can only be said to be an error, your Honour. It does not describe the facts; it is plainly the document which was executed by all three of the parties. It creates both obligations and entitlements in favour of each of them.
GUMMOW J: You have to go to page 58, special clause 11.1.
MR RUSSELL: Yes, your Honour. The role that the custodian is to play is set out in clause 11. As your Honour Justice Gummow has pointed out, there is an acknowledgement first:
that the Custodian is a party to this Contract -
And then:
for the purpose of accepting a transfer of the Property in its capacity as Custodian . . . pursuant to a Custody Agreement - - -
GLEESON CJ: Well, it acknowledges:
the Custodian is a party to this Contract solely for -
a particular purpose.
MR RUSSELL: Yes, your Honour.
GLEESON CJ: Does that mean that you have to read what appears on page 46 line 10 together with what appears on page 58 clause 11.1?
MR RUSSELL: Yes, your Honour.
KIRBY J: Presumably the statement on 46 long preceded the federal legislation, was relating to the contract in the normal sense between the vendor and purchaser and then along comes the federal legislation, in goes the custodian and then they have this clause 11.1 at page 58 to try and somehow sort it out.
MR RUSSELL: Yes, plainly there should have been a consequential change on page 46.
GLEESON CJ: That is why I asked you the questions I was asking you earlier about whether this is a standard form of contract. If you look at page 47, it is a form of contract that contemplates the presence of a custodian.
MR RUSSELL: Your Honour, my instructions are that the insertion of the expression "custodian" was, as I said, inserted by the parties actually drawing this contract as their own addition to a standard form contract.
GLEESON CJ: Where would we find the original contract?
MR RUSSELL: The original document?
GLEESON CJ: Yes, the exhibit, the one that is copied on page 46.
MR RUSSELL: It would be an annexure to the case stated, your Honour.
GUMMOW J: And not otherwise, I suspect.
MR RUSSELL: I am sorry, your Honour?
GUMMOW J: It would simply be a photocopy annexed to the case stated, will it not? It probably will not be the original.
MR RUSSELL: There would be - my instructions - - -
GUMMOW J: Because of the limited evidentiary.....in these stamp duty cases.
MR RUSSELL: Yes, that is right, your Honour, one is confronted with the facts as stated in the case stated.
GLEESON CJ: Let me ask you another question. What do the words "FIRST EDITION" which appear in parentheses on line 3 of page 46 mean, first edition of what?
MR RUSSELL: It was, as I said, your Honour, a standard form produced in this way which my instructing solicitors - which was varied for the purposes of this particular contract and that - it is obviously in those circumstances appropriate to use it if there had been no variation to the form approved by the REIQ. Given that there was a variation, those words should have been removed.
GLEESON CJ: So you are telling us that what appears on page 47 in the box with "B" in it and alongside it is something that was an amendment of a standard form of contract?
MR RUSSELL: Yes, your Honour.
HAYNE J: Insofar as we search for what is standard, do we find that at page 60 and following of the appeal book?
MR RUSSELL: Yes, your Honour, and your Honour will see again that these are said to be the "STANDARD COMMERCIAL CONDITIONS", "(FIRST EDITION)", and this is a printed form that relates back to the documents at the beginning.
HAYNE J: The standard form which I observe is marked "(FIRST EDITION)".
MR RUSSELL: Yes, your Honour. I am instructed that by now, the fourth edition has been reached, your Honours.
KIRBY J: I feel we have looked at these Queensland provisions in some earlier case. Do you know what that case was? I am sure I have had the great pleasure of wandering aimless like a cloud through one of the editions of the standard form.
HAYNE J: Moneywood.
KIRBY J: But could you tell me just as a matter of practicality, do the solicitors have it as a - because nowadays solicitors I think very rarely would - they would not have old-fashioned typewriters that they can type things into actual forms that you buy at the - they would have this as a template in their - - -
MR RUSSELL: Yes, those are my instructions, your Honour, and that that is so appears from the bottom of the page.
KIRBY J: Yes.
MR RUSSELL: The Law Society's practice is to make it available electronically now, your Honour, so that one downloads it from the Law Society and then it becomes your own document.
KIRBY J: I see, that seems sensible.
MR RUSSELL: But there has been - - -
KIRBY J: So the custodian just gets tacked on, but no one rethought the whole instrument for the purpose of making it in a different - or even describing it in a different way.
MR RUSSELL: Well, in the first instance, it could well be said not to be appropriate to describe it as the "First Edition" and "Adopted by the Real Estate Institute of Queensland" if you have made any alterations at all, as opposed to just filling in the gaps. But there is no suggestion of an attempt to mislead here, because the fact that the alterations are made is clearly stated in the instrument itself.
KIRBY J: Anyway, you make the point that in the end this case is not going to turn on how the parties describe themselves. That would be a real bootstraps argument. It is a matter of what they are in law.
MR RUSSELL: In fact, we would say that that is our learned friend's argument, in effect, that one looks at - - -
KIRBY J: Well, they put it as their second argument. I suppose they say, if you were the purchaser, you would have at least described yourself as the purchaser. There is an evidentiary or forensic argument you have to overcome, I suppose.
MR RUSSELL: And there is a specific requirement, in addition, in section 54(6A), that our learned friends rely on.
GLEESON CJ: Well, you say Trust Company of Australia Limited was the purchaser.
MR RUSSELL: Yes.
GLEESON CJ: What do you say Cromwell Property Securities Limited was?
MR RUSSELL: It was the person that funded the purchase and that was going to - - -
GLEESON CJ: Provided the purchase money.
MR RUSSELL: Yes, provided the purchase money. We say that in the context of section 54(6) the reference to a purchaser is a reference to the transferee named in the contract. We say, in this case, it was Trust Company of Australia Limited. There was never any prospect that anyone else would be the transferee.
KIRBY J: Is it a fair comment - which certainly the respondent makes - that if you now assert that you were the purchaser, that prudent solicitors would have so described you in paragraph E, and somehow adjusted the form and put in brackets "custodian" under the Federal legislation?
MR RUSSELL: We noted that in our learned friend's submissions. As we apprehended the position, it would not help us very much, if we were not in fact the purchaser - to call ourselves such would not change the stamp duty position.
KIRBY J: But it would remove one of their two main arguments.
MR RUSSELL: There is no doubt we would do it now, your Honour.
KIRBY J: That is true. We can always be wise after events.
HAYNE J: Now, the contract contains at Annexure "A" a very large number of amendments to the printed form appearing at page 60.
MR RUSSELL: That is right, your Honour.
HAYNE J: Has someone undertaken the exercise of preparing a consolidated document that will show what is struck out and what is inserted by application of Annexure "A"?
MR RUSSELL: Not for presentation to the Court today - - -
HAYNE J: Sometime, I would have thought, that might be a useful task to undertake so that we might the more readily follow the effect of the instrument which is brought to duty.
MR RUSSELL: There is no difficulty, your Honour, in our highlighting - I have in fact done it to my own copy - each time where reference is made where one of the plaintiff's - - -
HAYNE J: It is a mechanical task that will take a deal of time. It would be of assistance if that mechanical task were undertaken not by me, not by my associates, but by the parties.
MR RUSSELL: Yes, we will certainly do that, your Honour, and we will let your Honours have it within a week.
CALLINAN J: Mr Russell, most of the changes seem to be designed to simply put "custodian" as an alternative to "purchaser", is that right?
MR RUSSELL: That is so, your Honour.
HAYNE J: Well, is it?
MR RUSSELL: It is certainly true in relation to paragraph (b) - - -
CALLINAN J: Paragraph (b) at page 50.
MR RUSSELL: - - - starting at page 50, putting in "or the Custodian" as an alternative to "Purchaser".
CALLINAN J: And (c) on page 51.
MR RUSSELL: Yes, (c).
HAYNE J: But (d), upon which I would have thought something might possibly turn, is not the insertion of an alternative.
MR RUSSELL: That is true, your Honour, and indeed we do rely on that because that is the clause that has the result that it was only the custodian that might receive the transfer and your Honour will see there is a substitution for the custodian caused by paragraph (j) down at line 37 on the same page.
KIRBY J: The tax is upon the instrument, not upon the realities, is that a fair proposition?
MR RUSSELL: Yes, your Honour. This is a tax. Your Honour will be familiar with the situation in New South Wales under section 41(1) and 41(4) of the former Stamp Duties Act where if an agreement for sale is brought into existence it is dutiable. A subsequent conveyance is not provided one satisfies the Commissioner one has paid the duty on the agreement for sale. As our learned friend's submission points out, as indeed does our own, the New South Wales provision differed from the Queensland provision in that the New South Wales provision simply referred to a conveyance made in conformity with the agreement whereas the Queensland provision talks about a transfer made to the purchaser.
Effectively what our learned friends are saying is if this was in New South Wales we would not have a problem but because this was in Queensland and because there is a specific requirement for the conveyance to be made to the purchaser before the exemption applies - - -
KIRBY J: Do you underpin that submission with the reference to the legislation which was specifically enacted to overcome the Queensland problem in a case such as this by reason of the federal legislation?
MR RUSSELL: Yes, your Honour.
GLEESON CJ: Mr Russell, on page 61, clause 4(b) that you were recently asked about, there is a reference to note 9. Do you see that?
MR RUSSELL: Yes, your Honour.
GLEESON CJ: Where would we find note 9?
MR RUSSELL: On page 69 of the original appeal book and page 70 of the amended appeal book.
GLEESON CJ: Thank you.
MR RUSSELL: It does not seem to us that it addresses the matter at all.
GLEESON CJ: Thank you.
GUMMOW J: It is also important to look perhaps at special condition 10.1, line 5:
for the purpose of completing the sale and ensuring that the -
custodian -
obtains a good and valid title.
That is the effect of the special amendments.
MR RUSSELL: I am sorry, your Honour, what page?
GUMMOW J: Special condition - standard condition, 10.1.
MR RUSSELL: I am sorry, your Honour said "special".
GUMMOW J: Standard condition, 10.1, line 5.
MR RUSSELL: Yes, and that is required to be read as "custodian".
GUMMOW J: As "custodian" instead of "purchaser".
MR RUSSELL: Yes.
GUMMOW J: Standard condition 24 is dealing with:
MERGER
Despite completion and despite the registration of the transfer in favour of the -
custodian, and in general, et cetera.
MR RUSSELL: That is paragraph (j) of the special conditions - - -
GUMMOW J: Yes, that is right.
MR RUSSELL: The position, as we submit it, is that the contract required that there would be a conveyance to the appellant and the appellant only. The appellant did not stand in that position as a subsequent nominee of a purchaser but in its own right. It not only had the right; as we apprehended it, it would have been a necessary party to any proceedings to obtain specific performance of a contract that the vendor refused to complete and, in our respectful submission, in the context of section 54(6) and indeed in any event that was sufficient, given that it was always the intended transferee to make it the purchaser.
KIRBY J: These are arguments of merits and as far as I am concerned you do not really have to persuade me on sort of the general view of merits and the legislation has addressed that now, but what we ultimately have to do, it seems, is to look at the statutory language and see whether or not what has occurred fits comfortably within the statutory language and the purpose of Parliament.
MR RUSSELL: Yes, that is right, your Honour.
KIRBY J: So, some of those matters you have just mentioned are softening us up but ultimately you are going to have to come to grips with the - - -
MR RUSSELL: Yes, I certainly intended to do that, your Honour. We would say that the answer really has to be found in the statutory history of section 54(6). If it is convenient to the Court, I am happy to deal with that aspect of the matter now.
GLEESON CJ: Yes, please.
MR RUSSELL: Your Honours, most of the material on which we rely in this regard is to be found in the annexures to our submissions in reply. Section 54 is a much amended section and at Appendix 1 to our submissions in reply your Honours will see it in its original form with the exception of subsection (6) which was on the following page and which I have here to hand up to the Court for completeness but which does not affect this aspect of the matter at all.
KIRBY J: I am sorry, I missed the significance of that.
MR RUSSELL: Subsection - the original section 54 from the 1894 Act.
KIRBY J: That is the page numbered 5102?
MR RUSSELL: Yes, your Honour.
KIRBY J: Yes.
MR RUSSELL: It in fact went over on to page 5103. There was a subsection (6) which we have here but which does not affect the matter in any way at all.
KIRBY J: We had better have a look at it though.
MR RUSSELL: Yes, certainly, your Honour.
KIRBY J: You can just slip it into the submission.
MR RUSSELL: It related to the entitlement to a refund of duty if the contract was rescinded. The Court will see that the provision with which we are now concerned was originally subsection (3):
Where duty has been duly paid in conformity with the foregoing provisions, the conveyance or transfer made to the purchaser or sub-purchaser, or any other person on his behalf or by his direction, shall not be chargeable with any duty, and the Commissioners, upon application, either shall denote the payment of the ad valorem duty upon the conveyance or transfer, or shall transfer the ad valorem duty thereto upon production of the contract or agreement, or contracts or agreements, duly stamped.
The foregoing provisions were two. There is section 54(1) which, whilst in different form, expresses the same concept as the existing 54(1), and there is section 54(2) which operated in a completely different way. That was to deal with the issue of sub-sales. All of the subsequent amendments to section 54, in our respectful submission, come back to the legislature's attempt to grapple with sub-sales.
The approach taken in section 54(2) was to say that a sub-sale was dutiable either with nominal duty if it was for less than the original purchase price or for the additional value if it was for more than the original purchase price.
GLEESON CJ: That is a very generous taxing regime.
MR RUSSELL: It was repealed in 1918, your Honour. It did not last very long.
GLEESON CJ: It would produce the consequence that if A sold Blackacre to B for [sterling]100 and before B took title B sold Blackacre to C for [sterling]90, there was no ad valorem duty on the second transaction.
MR RUSSELL: That is right, your Honour. As I say, it did not last long. Just so your Honours have the history of it, this provision is modelled on section 59 of the 1891 Act in the United Kingdom, which was introduced to deal with the decision in Inland Revenue Commissioners v Angus.
GUMMOW J: What is the reference for that?
MR RUSSELL: I am handing up to your Honours Sergeant and Sims which sets out the history of it, but the specific reference to Inland Revenue Commissioners v Angus is (1889) 23 QBD 579. That is dealt with at page 143 of the ninth edition of Sergeant and Sims.
KIRBY J: Is a sub-sale anything more than the sale on by the original purchaser to another purchaser? Is it a term of art or is that all that is involved?
MR RUSSELL: No, it is a sale that occurs between the contract and the conveyance. So that A is entitled to a conveyance under the contract. A sells to B his right to receive the conveyance.
GLEESON CJ: What section 54(2) deals with is, to use a neutral term, an "on sale" before the original purchaser has taken title.
MR RUSSELL: Yes, that is right, your Honour. I am sorry, your Honour. It has been referred to as a sub-sale in the literature, which is why I used that term. Your Honours will see in the extract from Sergeant and Sims two pages earlier - so on page 142 your Honours will see the text of section 59 of the English Stamp Act as it was when the ninth edition was published in 1988. Your Honours will see that the generosity of the revenue, to which your Honour the Chief Justice referred, in fact remains in the United Kingdom in the original - in section 59(2) but, as I explained to your Honours, does not here.
KIRBY J: What page is that, Mr Russell?
MR RUSSELL: That is on page 142, your Honour. About point 6 your Honours will see a section 59:
Certain contracts to be chargeable as conveyances on sale.
GLEESON CJ: How, if at all, did the original legislation in Queensland deal with the problem that is perhaps closer to the problem of which we are concerned, that is, where B acquires contracts to purchase Blackacre from A with the intention that A will convey it to B's nominee, B's child, if you like?
MR RUSSELL: If then, and indeed now, A was acting as agent at the time the contract was entered into for the intended conveyee, then the conveyance is entitled to nominal duty. If the - - -
GLEESON CJ: But what if I go to you and I say, "I'd like to buy your house for my daughter. I will pay you $X and I want you to contract that you will upon completion transfer the property to my daughter." How did the original legislation deal with it and how does it deal with it now?
MR RUSSELL: The original legislation, section 54(3) in its original format, would have given an exemption because words which no longer appear in it were still there. Your Honour will see that it originally said:
(3) Where duty has been duly paid in conformity with the foregoing provisions, the conveyance or transfer made to the purchaser or sub-purchaser, or any other person on his behalf or by his direction, shall not be chargeable with any duty - - -
GLEESON CJ: It would be the words "by his direction" that would pick up the case I put to you.
MR RUSSELL: Yes. Because the issue arises of the general statutory intent, it is probably relevant at this point to take your Honours to page 143 of Sergeant and Sims where the scope and purpose of the section is set out and the apprehension of the learned authors that the Act was passed following Inland Revenue Commissioners v Angus - effectively there had been a contract of sale for goodwill of a business. The Commissioners had assessed it to duty as a conveyance on sale, they had lost. So the amendment made an agreement for sale of property that was not followed by a conveyance dutiable for the first time, imposed conveyance duty on it and to avoid double taxation, we would say, contained the provision in subsection (3) of the English Act and originally subsection (3) in the Queensland Act that exempted a conveyance in conformity with the contract.
For completeness, we have also given your Honours as Appendix 2, but I do not need to take your Honours to it, the text of section 59 of the English Act shortly after it was enacted. That is Appendix 2 to our reply. It is from a text by Piper, "Stamp Laws and Duties", and your Honours will see that on page 195 of that appendix at about point 4 there is the same conclusion that section 59 was enacted to deal with the problems created by Inland Revenue Commissioners v Angus. The Queensland Act was first substantially amended in relation to these provisions in 1918. We have given your Honours in Appendix 4 the amendments made to section 54 of the Act.
KIRBY J: Is that the page that is 8966?
MR RUSSELL: No, 8553, your Honour. I have got - sorry, 8966, yes, your Honour.
GLEESON CJ: That is Appendix 6?
MR RUSSELL: That is the legislation as it was amended, your Honour - - -
GLEESON CJ: That is Appendix 6, is that right?
MR RUSSELL: Yes. Appendix 4 is the amending legislation. We have given your Honours both the amending legislation and the consolidated version.
GLEESON CJ: Appendix 4 is of Mr Piper's book, an English text.
MR RUSSELL: I am sorry, your Honour, we advised the Court that your Honours will then have it as Appendix 2.
HAYNE J: A touch of the renumbering again.
GLEESON CJ: Is it convenient to go to Appendix 6?
MR RUSSELL: Appendix 6 will give your Honours the provision as - - -
KIRBY J: The consolidated version.
MR RUSSELL: Yes, the consolidated version.
GLEESON CJ: Showing the 1918 amendments.
MR RUSSELL: Yes, showing the Act as amended by 1918.
KIRBY J: And we do not actually the 1918 amending Act?
GUMMOW J: Yes, we do. It is Appendix 4.
MR RUSSELL: It is Appendix 4, your Honour.
KIRBY J: No, Appendix 4 is Mr Piper's....., as the Chief Justice has pointed out.
MR RUSSELL: Sorry, we advised the Court some days ago that that was an error. What your Honours have is Appendix 2 should have been Appendix 4.
KIRBY J: I see. Appendix 2 is the 1918 amending Act.
MR RUSSELL: Yes.
KIRBY J: Which is the section of the amending Act?
MR RUSSELL: Section 26, your Honour. Your Honour will see section 54(1) is repealed and a new subsection (1) is inserted, then subsections (2), (4) and (5) of the section are repealed.
GLEESON CJ: How does the Act as amended in 1918 deal with the example I gave you, that is, I go to you and I say, "I would like to buy your house for my daughter", so I enter into a contract with you under which you are compelled to convey to her?
MR RUSSELL: We would say that if the daughter is not a party to the contract and not liable to pay duty, there may be a problem because it is only the purchaser who is liable to pay the duty under the 1918 Act as amended. The words "to be paid by the purchaser" which appear after the subparagraphs, so at about point 6 on the page - the contract agreement for the sale:
shall be charged with the same ad valorem duty to be paid by the purchaser as if it were an actual conveyance -
and then subsection (3) goes on to say:
Where duty has been duly paid in conformity with the foregoing provisions, the conveyance or transfer made to the purchaser shall not be chargeable with any duty - - -
GLEESON CJ: So we have got rid of other people by his direction?
MR RUSSELL: Yes. In addition, your Honour, the question - - -
GUMMOW J: The direction is sort of a direction arising by the exercise of a power to do so conferred in the contract, that may be one thing. This is a case where the outcome is dictated in final form immediately in the contract itself.
MR RUSSELL: Yes, but, your Honour, that was not the question that I apprehended his Honour the Chief Justice to have put to me. I understood the Chief Justice to be asking the question of A buying, intending it to be for his daughter, but his daughter not being mentioned in the contract at all.
GUMMOW J: I am not sure about that.
MR RUSSELL: It might be in that situation A's daughter would take, as we apprehend it, by direction rather than by the contract itself.
GLEESON CJ: Your answer would be it would all depend on the way the contract dealt with that matter.
MR RUSSELL: Yes. If one were a person who took other than pursuant to the contract itself, you would then need to come within the sub-sale provisions which were recast at the same time.
GLEESON CJ: But I thought you said in your written submissions that unless there was something to the contrary in the contract a purchaser always has the right to direct a vendor to convey to the purchaser's nominee.
MR RUSSELL: We simply put that forward as a statement of the common law, your Honour, yes. That can be varied by contract, and was in this case. It is a case, actually, on my learned friends' list. They quote Justice Aickin in Lord v Trippe (1977) 51 ALJR 574 for that proposition. The extracts to which our learned friends referred the Court were at page 582, column 1:
It is a common enough practice in real estate transactions for the contract itself to provide that the transfer is to be made to the purchaser or his nominee, but that gives a power to substitute or nominate a different transferee, not a different contracting party. The vendor becomes bound - - -
GLEESON CJ: Sorry, where are you reading from? Page 582? In the left hand column?
MR RUSSELL: Yes, your Honour.
GLEESON CJ: Whereabouts on the page?
MR RUSSELL: Midway between points B and C, your Honour.
GLEESON CJ: Thank you.
GUMMOW J: It really comes down to Egmont v Smith, does it not?
MR RUSSELL: Yes.
GLEESON CJ: The example I gave you is only a particular example of that general principle.
MR RUSSELL: Yes, your Honour, but we would - - -
GUMMOW J: The question would arise if, in its initial form, the contract was between A and B, but an obligation to convey to C, does that foreclose any direction to convey to D subsequently made?
MR RUSSELL: It would certainly, in our respectful submission, foreclose the possibility of anyone other than the transferee giving the direction. If the obligation is to transfer to C - - -
GUMMOW J: But you have a tripartite contract: A, B and C are parties to it.
MR RUSSELL: In our respectful submission, the answer to your Honour's question is either that - - -
GUMMOW J: You would need an - - -
MR RUSSELL: - - - there is no capacity to vary the transferee, at least, without the consent of all parties, or, if that is wrong, the alternative position would be that it being C who has the right to take the transfer, in your Honour's question, it would only be C who could direct that its right would be satisfied by someone else taking the conveyance.
GLEESON CJ: But how did the Queensland Act, as amended in 1918, deal with a situation to which reference is made on page 582, that is, the ordinary case in which a purchaser under a contract directs the vendor to convey to someone who is not a party to the contract?
MR RUSSELL: That is dealt with in section 53(9), if the Court pleases. I will hand up to the Court - sorry, 53(4).
KIRBY J: What year is this Act?
MR RUSSELL: This is a continuation of Appendix 6. It is the consolidated version of the Act after amendment in 1988. It is, in fact - Appendix 6, your Honours will have noted, was page 8966 numbered in the statutory volumes. This is page 8964.
GLEESON CJ: It only deals with one specific example of this; it only deals with a case where there has been a contract between the purchaser and the third party.
MR RUSSELL: Yes. In other circumstances, as we apprehend it, the intention - there afterwards you paid double duty. You had to bring yourself within 53(4). In other words, you had to - a subsequent conveyance if the person is contracted for the purchase of property:
but not having a conveyance . . . contracts to sell the same to any other person, and the property is in consequence conveyed or transferred directly from the first vendor of the property to a sub-purchaser, the conveyance or transfer shall, for the purposes of this Act, be deemed to be a conveyance or transfer on sale of the estate or interest in the property of each purchaser, and sub-purchaser -
So we are then in that situation of sub-purchase.
GLEESON CJ: Read on.
MR RUSSELL:
shall be chargeable with ad valorem duty in respect of the consideration moving from the purchaser and each such sub-purchaser respectively.
GLEESON CJ: So that is what you call double duty?
MR RUSSELL: No, that is not double duty, your Honour, that is a sub-sale. A has sold to B. Before B takes the conveyance B sells to C.
GLEESON CJ: Yes. A sells to B for [sterling]100 and B sells to C for [sterling]110. What are the amounts on which ad valorem duty is assessed?
MR RUSSELL: Both amounts, your Honour.
GLEESON CJ: You pay a duty on the [sterling]100 and you also pay duty on the [sterling]110; two lots of duty?
MR RUSSELL: Yes, and that differs from the regime that applied before 1918 in two respects: if A sold to B and B sold to C and B sold for less than the first conveyance. So, in other words, in the first example your Honour the Chief Justice gave me [sterling]100 followed by [sterling]90, there was only one ad valorem duty paid. If A sells to B and B sells to C for [sterling]110, then ad valorem duty is taken on the [sterling]100 and then on [sterling]10. The change made by 1918 was to exact ad valorem duty on both sets of considerations.
GLEESON CJ: Well, it got rid of the generosity.
MR RUSSELL: Yes, but, your Honour, in our submission, and this is where we differ from our learned friends, we say that if A under the contract was always going to transfer to C and consideration passes and duty is paid on the contract under which A is to transfer to C, when A transfers to C in accordance with the contract, there is not double duty.
The next changes to the statutory provisions were made in 1926 and the Court has as Appendix 7 the amendments that were made in that year. I am sorry, I should have while I was dealing with the 1918 legislation taken your Honours to what was said in the Parliament about it. That appears in Appendix 5. At page 281 of the Queensland parliamentary debates, the second page of the appendix in the second column at about point 5 Parliament is told:
All agreements for the sale of property will be chargeable with a conveyance duty, which is in accordance with the English law.
It is not a very helpful statement. If your Honours compare the new section 54(1) with the original section 59(1) in the United Kingdom your Honours will see that in that respect the law was made similar to England but, of course, by repealing subsection (2) a feature of the English legislation was dispensed with. Parliament was not told about that. But, more significantly, we would say, Parliament was certainly not told that there was a departure from the broad proposition that if you pay duty on the contract you do not pay a second amount of duty on the conveyance in conformity with the contract. We say there was never any intention to achieve an outcome which would subject a subsequent conveyance to a second lot of duty.
In our respectful submission, that became even clearer with the 1926 amending Act. The amendments that were made there start on the first page of Appendix 7 by section 23 of the Stamp Acts Amendment Act. There was a small amendment made to subsection (1) and a proviso added. Then three new charging provisions are added. First, agreements in respect of exchange and agreements in respect of partition of property. The second agreements were by an optional right of purchaser created and then, (4) and (5). Subsection (4) became and remained unique to Queensland. It is stamped "memorandum of association of such company" as if it were a conveyance if you had an agreement but did not reduce it to writing and submit it for stamping. The proposed subsection (5) also created a new charging provision. The point to which we particularly refer then is the next paragraph, your Honours, paragraph (c):
Subsection three shall become subsection six of this section.
Why we say that is significant is that the opening words of subsection (3), as it was subsection (6), as it now is and in this respect still is where duty has been paid in conformity with the foregoing provisions. In our respectful submission, that plainly meant all of them and not just subsection (1). Nothing would have been easier than to put the new charging provisions after the existing subsection (3) if it was not intended to grant the relief but instead they are put ahead of it and indeed subsection (3) is renumbered as subsection (6).
The new charging provisions clearly apply to transactions other than sales. They refer firstly to exchanges and agreements for partition, not sales in the ordinary sense of the term. The somewhat peculiar liability to duty was created by subsection (3) which appears to apply where property is transferred pending the exercise of an option to a stakeholder, the certificate of incorporation provision and subsequent instruments under subsection (5).
So in all of those cases you could, in the case of the new subsection (2) must, if someone who as a matter of law is not a purchaser strictly so-called, and yet the Parliament puts those provisions in, moves subsection (6) down and its commencing words are:
Where duty has been duly paid in conformity with the foregoing provisions -
So, in our respectful submission, at that point still there is a clear statement of the intention of Parliament that if you are subjected to a duty on the contract to make any of these things happen then you are not to pay duty on a subsequent conveyance in accordance with the contract.
Sub-sales continued to rear their ugly head and as a result of that we have a series of provisions which are evidentiary in nature. The first of them that is material for present purposes is that effected by the Stamp Act Amendment Act 1979 , which is Appendix 8 to our reply.
GLEESON CJ: Just before you pass on from your last proposition. You say the scheme of the legislation is that if you have paid ad valorem duty on - I am sorry, let me put it in the passive voice. If ad valorem duty has been paid on the contract, the legislative purpose is that it is not necessary that ad valorem duty be paid on a conveyance in accordance with the contract, is that right?
MR RUSSELL: That is right, your Honour, yes.
GLEESON CJ: Well, suppose A contracts to purchase Blackacre from B and it is stipulated in the contract that B will transfer Blackacre to C and suppose the explanation of that is that there is another contract between A and C under which A agrees to sell Blackacre to C, but no duty has been paid on that second contract. Is the scheme of the legislation that no ad valorem duty is payable on the transfer from B to C?
MR RUSSELL: In principle we would say yes, but the matter arises because of the operation of section 53(4) as it then was. The question would be whether at the time B entered into that transaction with A, B was acting as C's agent. So if what B had done - - -
GLEESON CJ: I had not included that element in it at all.
MR RUSSELL: I am sorry. If it is simply a situation that if B enters into a contract saying, "If I'm able to acquire Blackacre from A, I'll sell it to you" - - -
GLEESON CJ: But what relieves duty - - -
MR RUSSELL: There would be no relief.
GLEESON CJ: What relieves duty on the transfer is not the dutiability of a contract, it is that duty has been paid on a contract, is it not? Which is it?
MR RUSSELL: But in that situation, in our respectful submission, it is not - and this was in fact one of the issues that was discussed in Vickery. That would not be a conveyance in conformity with the contract, to use the New South Wales terminology.
HAYNE J: Can the premise which the Chief Justice's example gives you occur, that is, can the contract A to C not be dutiable? Would not the contract A to C itself bear duty?
MR RUSSELL: Sorry, I may have misunderstood what his Honour the Chief Justice put to me.
GLEESON CJ: I put to you just two contracts, but I did not put to you that duty had been paid on the second contract. What is it that relieves the transfer of duty? That it is pursuant to a dutiable instrument or pursuant to an instrument on which duty has been paid? That is not the same thing.
MR RUSSELL: Duty has to be paid because you have to provide to the Commissioner evidence of payment as part of the entitlement to relief.
GLEESON CJ: Exactly. What relieves you of the liability to pay duty on the transfer is not that it is pursuant to a dutiable instrument but that it is pursuant to an instrument on which duty has been paid.
MR RUSSELL: That is correct, your Honour.
GLEESON CJ: So in the example I gave you, you have a contract between A and B and a contract between A and C. You have duty paid on the contract between A and B and a transfer from B to C but no duty paid on the contract between A and C. What happens then?
MR RUSSELL: In our respectful submission, your Honour, leaving aside the sub-sale provisions, that would not be a conveyance to the purchaser named in the contract on any view of what the term means, so the conveyance to give effect to the second contract would exigible.
GLEESON CJ: It would be conveyance in accordance with the contract, to use your expression.
MR RUSSELL: Yes, but not one on which duty had been paid. The position which your Honour the Chief Justice has to put to me was that A has entered into an agreement with B but if A is able to acquire Blackacre from - - -
GLEESON CJ: No, my example is this: B is the owner of Blackacre, A has contracted to buy Blackacre from B and A has contracted to sell Blackacre to C, perhaps before A has entered into the contract to buy it from B, and in the contract between A and B there is a stipulation that B will on completion convey Blackacre to C.
MR RUSSELL: If the contract between B and C predates the contract between B and A, in other words if before he has the property to sell B says, "If I am able to get it, I will sell it to you", for Queensland purposes duty would not be payable on that contract because it would be an instrument that achieved nothing. It would not affect the conveyance of property or create a right to a conveyance of property under the original legislation. If it occurred after, it would simply be a sub-sale.
GLEESON CJ: What if it happened at the same time?
MR RUSSELL: If it happened at the same time, then the position would be that the intermediate conveyor would say that at the time he purchased the property, he did it as agent for the intending conveyee. And if he did it pursuant to an agreement and authority to acquire it and pass it on, then he would be entitled, even under the law as it presently stands, assuming the necessary documentary evidence exists - there would be one set of duty paid only.
GLEESON CJ: Thank you.
MR RUSSELL: The legislation was next amended in 1979, and here we come to the provisions that are now subsections (6A) and (6C). That is Appendix 8. I am sorry, your Honours, for completeness, there was an amendment made in 1930. Your Honours will recall that I pointed out that the 1926 amendments brought into section 54 for the first time the notion of exchanges and partitions of property. In 1930, they were taken out and relocated elsewhere in the Act. The legislation which I have just handed up is the Stamp Act Amendment Act 1930 . Your Honours will see that, by section 2 of that Act, section 54(2), which was the exchange and partition provision, was repealed, and a new section 55 was inserted.
Your Honours will see that there is effectively no change in the taxing regime. Agreements for partition or division are taxed as if they were actual conveyances or transfers. Agreements for exchange are taxed as if they were actual conveyances or transfers. Then in subsection (3), but retaining what we would say is the essential scheme of the legislation, the conveyances then become taxed at nominal duty of 10 shillings. So we would say that by 1930, there was a clearly settled legislative policy that one did not pay duty on conveyances that do not affect contracts on which duty had already been paid.
In 1979 - and the amending legislation is set out in Appendix 8. Your Honours will see on page 119, the second page of our appendix, the two provisos that are the legislative antecedents of the present subsections (6A) and (6C). That is at paragraph (d), about a third of the way down the page. The first two paragraphs were added as provisos to subsection (6). The changes that have been made to create the new subsections (6A), (6B) and (6C) have been made under our Reprints Act, rather than by parliamentary enactment. Again, to explain the legislative context, the second reading speech for that Bill is Appendix 10. The treasurer's description of what is done appears on page 2 of that appendix in columns 1 and 2 on page 4563 of the Queensland Parliamentary Debates. First, in the second paragraph in column 1 on that page - - -
GLEESON CJ: Is this Appendix 10?
MR RUSSELL: Yes, your Honour.
GLEESON CJ: Page 4562.
MR RUSSELL: Page 4563, your Honour. Page 4562 your Honours will have noted some interesting contributions by Mr Hinze.
GLEESON CJ: Always beware of a man with an oily tongue. We should put that on the entrance to the Court.
MR RUSSELL: I hope your Honour does not have your present submitters in mind. The second paragraph in column 1 on page 4563:
There will also be a clarification of the situation where a purchaser claims he is acting as an agent for the real purchaser. Nominal duty will continue in these cases, but only if written evidence of the appointment of the agent executed prior to the execution of the contract or agreement is forthcoming.
GLEESON CJ: Mr Russell, there is a slight disconformity between two subsections, one of which refers to the purchaser and one of which refers to a person named as a purchaser. Is that of any significance or did it just come in with this amendment?
MR RUSSELL: It came in with this amendment, on page 119, this is in Appendix 8, the expression "named as purchaser" appears on the third line of the first paragraph that was added. In subsection (6C) there is a reference to "named person or his or her nominee", then there is a reference there to "purchaser". In our respectful submission, the legislature was just not attempting to address the issue of sales in conformity with contracts at all. It was trying to deal with the situation where somebody other than the transferee named in the contract claimed to be entitled to get the benefit of the duty that had been paid on the contract and a series of evidentiary provisions - or if evidentiary provisions were placed in the Act, first by this Act and then later in 1988 - - -
GLEESON CJ: It may be, and I suppose this is your argument, that what is now subsection (6A) uses the expression "named as purchaser" simply because of the nature of the problem that has been dealt with in subsection (6A) and not by way of comparison with subsection (6).
MR RUSSELL: Yes, we would say in addition, your Honour, that if we satisfy you that we are the purchaser within the meaning of subsection (6) because we were a party to the contract, we are necessarily named in the contract and if our role in the contract is truly described for the purposes of the legislation as the purchaser, then we are named as purchaser. In other words, in our respectful submission, what is required is not that the word "purchaser" appear after our name in the contract and, indeed, if the word "purchaser" did appear after our name in the contract but in law we did not satisfy that description, then we would not be entitled to rely on the fact that we were named as purchaser.
GLEESON CJ: Is it necessary for your argument to succeed that we conclude that your client was the purchaser, or is it sufficient that we conclude that your client was a purchaser?
MR RUSSELL: It would be sufficient - the expression in subsection (6) refers to the - the Court would have to be satisfied that we were the purchaser named in the contract.
GLEESON CJ: You and not Cromwell Nominees?
MR RUSSELL: Yes. In our respectful submission, though, if as a matter of law you would characterise two parties as the purchaser, then the mere fact that we are one of them would be, in our respectful submission, sufficient to attract - - -
GLEESON CJ: That is why I asked you the question that I did.
MR RUSSELL: Yes.
GLEESON CJ: There is a slight awkwardness in actually getting rid of Cromwell, is there not?
MR RUSSELL: That is right, your Honour, yes.
GUMMOW J: It would be a necessary party to any specific performance suit, I would imagine?
MR RUSSELL: Cromwell?
GUMMOW J: Yes, the whole - - -
MR RUSSELL: If it had performed its obligations - - -
GUMMOW J: You could not have a specific performance suit just between two, leaving out the third. It would be deficient for a lot of parties, though the actual decree might require a conveyance.
MR RUSSELL: It would be necessary, but this is the managed investments regime that it be done with its concurrence in any event with its responsible entity.
GLEESON CJ: So do you say that there were relevantly two purchasers for the purpose of the application of the stamp duty legislation?
MR RUSSELL: Your Honour, in our submission, the transferee is the purchaser named in the contract. The transferee named in the contract is the purchaser for the purposes of section 54(6), unless you are able to establish that the person named in the contract was an agent for the actual intended purchaser and now, of course, can satisfy the various evidentiary purposes - - -
GUMMOW J: There is no agency point, is there?
MR RUSSELL: Not here, no.
GUMMOW J: No. There was below but not here.
MR RUSSELL: Yes. If one goes back to the second reading speech, the Treasurer dealt with the matter a little more fully in column 2 of page 4563 at about point 6:
As previously explained, where land is purchased by an agent, nominal duty on the further conveyance to the real purchaser will be available now only in the circumstances where it was purchased pursuant to an authority conferred in writing prior to the original sale. There has been some comment that in some cases this requirement will be impracticable and create difficulties. The example quoted is that it is common for a purchase to be made by a purchaser or nominee to allow for a later decision to be made as to what member of a group of companies would be the eventual purchaser so as to obtain the best advantage. However, I feel that it is not impossible to overcome these sorts of problems. It has been a real necessity to amend the provision in view of the way it was being utilised.
That may not be a sufficient response to the complaint but what is very clear is there is no intention to create double duty.
The next amendment which brings the legislation largely to its present form was effected by the 1988 amending legislation. That is Appendix 9. Your Honours will see that that Act amended both section 53 and section 54 in relation to the sub-sale issue. The amendment to section 53 was made by section 52 of the amending Act and the amendment that is relevant to the sub-sale issue appears at page 330 of Appendix 9. It will be seen that one is brought back to the question of the Commissioner being satisfied that the person who claims to be entitled to the benefit of provisions can show he was "acting under an authority" that existed in writing prior to the agreement for sale.
Then a further proviso was added to subsection (6) which is the legislative forerunner of present subsection (6B). That was effected by section 54 of the amending Act. That is at page 331 at about point 7 on the page.
KIRBY J: What is the relevance of subsection (9)?
MR RUSSELL: In section 53, your Honour?
KIRBY J: Yes.
MR RUSSELL: That was to qualify a relief that was available in the context of sub-sales and to qualify it so that relief was available only if you could prove prior agency. With the legislature - and it appears, we would say, from the Treasurer's second reading speech. What the legislature was concerned with is a situation where contract is made between A and B. C turns up and says, "I'm entitled to the benefit of that. B was acting for me." There is always the risk in these circumstances that C is not telling the truth. So the legislature has - - -
KIRBY J: Or the parties have got together to avoid a duty.
MR RUSSELL: Yes, so the legislature is saying if you want to get the benefit of that relief, then you have to show, and show by documentary evidence - and the bar was raised higher in 1988, because mere documentation was not enough anymore - you had to show that such an agency situation existed.
What we say in relation to legislative intent can perhaps be put most highly in this situation: A enters into a contract with B, B is acting as agent for C. In that situation, provided you can show that the evidentiary provisions are met and that B was indeed acting for C, the conveyance from A to C is exempt, but if the Commissioner is right, then when A, B and C in the same document determined that A is to convey to C, the conveyance from A to C does not get the exemption.
GLEESON CJ: You say "exempt". Do you mean subject only for nominal duties?
MR RUSSELL: Subject only for nominal duty. Well, technically entitled to have the duty paid on the contract set off against the duty payable under the conveyance, if it wants to use the words of the section, but that, effectively, produces - it certainly produces an absence of ad valorem duty.
GLEESON CJ: So, in terms of the legislation with which we are concerned, it is subsection (6A) - - -
MR RUSSELL: Subsection (6) that gives that relief, your Honour.
GLEESON CJ: Which is the one that deals with the agency, the nominee example?
MR RUSSELL: That is now in (6A), (6B) and (6C).
GLEESON CJ: Subsection (6A) produces the consequence that if B, the purchaser, is acting as agent for C, even though that is not disclosed in the contract, there is no ad valorem duty on the transfer to C.
MR RUSSELL: That is correct, provided you can satisfy the evidentiary requirements.
GLEESON CJ: Yes, but if the argument against you is correct, subsection (6) produces the result that if the contract between A and B includes C as a party, recites that B is providing the purchase money on behalf of C, and requires A to convey to C, there are two lots of duty.
MR RUSSELL: Yes, and whilst at times - your Honour adverted to this in a recent case on the purpose of statutory construction, whilst it is difficult at times to say with confidence what Parliament intended, one could say with some confidence, we would respectfully submit, that this is not an outcome that would have been intended and certainly if it is an outcome that has come about, it is an outcome that involves double taxation, which at no stage has been referred to in the parliamentary materials.
KIRBY J: Well, it does not really. It involves taxation on different people in respect of different interests illustrated in the instrument at different times.
MR RUSSELL: It is, in substance, and his Honour Justice Thomas, in our respectful submission, put it very well in the Court of Appeal.
KIRBY J: I agree with the substance. I am thinking of the principle of addressing the application of the statute to the instrument.
MR RUSSELL: Yes. The relevant principle here, we would say, is that Parliament has put forward in subsection (6) a provision that is intended to achieve the result that where a contract is brought to tax, that simply brings forward the taxing point, because there will be a conveyance and it would be dutiable. The conveyance is relieved from duty to the extent that duty has been paid on the contract. So that one pays on what is, in substance, one transaction one set of duty.
KIRBY J: The new legislation came before the decision of the Court of Appeal, but after the events that attracted duty in your case.
MR RUSSELL: That is correct, your Honour, yes.
KIRBY J: So that rather suggests that if you are talking about intention, which I never do, but if you are talking about purpose of Parliament, they saw a loophole which they hurried to correct, but not hurried quickly enough for you.
MR RUSSELL: Not so much a loophole, your Honour, as an injustice.
KIRBY J: An injustice, yes; the injustice which you want us to fix up by reference to this very long legislative history and reading the statute in that context.
MR RUSSELL: Yes, your Honour.
KIRBY J: I suppose you can say you will not strain to apply the Act in an event where effectively it means a form of double taxation on the substance of the transactions.
MR RUSSELL: We would go further, your Honour, and say that if one looks at particularly the amendments made first in 1926 and the renumbering of subsection (6) in a context where it was intended to provide relief to circumstances which clearly did not include sales and purchase but where it referred to the foregoing provisions, the subsequent amendments made in 1930 to preserve the exemption in relation to agreements for partition and agreements for exchange, we would say that there is a clear intention demonstrated on the part of the legislature to collect the duty on a conveyance made in conformity with the contract once, but only once.
GUMMOW J: One of the problems of your opponents seems to be that on the Commissioner's way of looking at it either there is no purchaser here or there is a purchaser but it is not the party who is going to receive the conveyance, which seems odd.
MR RUSSELL: Part of the problem, in a sense, is this, that section 54 originally dealt only with agreements for purchase. It now deals with any agreement under which a person may accept a conveyance and, as we apprehend it, it dealt solely with purchasers and also made only the purchaser liable for the duty and then the exemption and if - and a subsequent conveyance which was not a purchase under the legislation as it then stood would have been entitled to nominal duty because in those days there was a conveyance of any other kind, whatsoever head of duty, which attracted nominal duty. So, it was only if you could say that a transaction was a conveyance on sale that you paid ad valorem duty.
So that the section, as originally drafted, did achieve that objective. What has been overlooked as subsequent changes have been made, or what is obscured by the subsequent changes is that original purpose, which we say has never changed.
CALLINAN J: There is no doubt there is only one sale here, is there not?
MR RUSSELL: Yes, in our respectful submission. There is no suggestion of any avoidance. All the judges of the Court of Appeal said that.
CALLINAN J: Section 54(1) speaks of "sale", not "purchase".
MR RUSSELL: That is so, your Honour.
CALLINAN J: Duty was paid on the contract in conformity with section 54(1).
MR RUSSELL: Yes. Our learned friends would say not by the purchaser.
CALLINAN J: I know that, but why should you not read subsection (6):
transfer or conveyances . . . made -
pursuant to the "contract" referred to in 54(1)?
MR RUSSELL: In our respectful submission, that is the legislative intent, the purchaser means the transferee named in the contract, because otherwise one is struck with the fact that you have a relief provision intended, as we would see it, to relieve against double taxation on the same transaction which starts off with:
Where duty has been duly paid in conformity with the foregoing provisions -
And yet, in some cases at least to which the foregoing provisions apply, you do not get the relief.
CALLINAN J: The foregoing provision is 54(1) and it refers to a sale.
MR RUSSELL: It is not just section 54(1), your Honour. It is 54(4), 54(5), 54(3) and it was 54(2) as well.
CALLINAN J: The emphasis is on 54(1) though, is it not?
MR RUSSELL: That is the historical reality of it.
CALLINAN J: How do the other subsections apply to this transaction?
MR RUSSELL: They do not, your Honour.
CALLINAN J: We only look at 54(1) then, do we not? That is the only one relevantly you have to conform with, is it not?
MR RUSSELL: It is the only one with which we can conform, yes. One of the rather absurd results of all of this was if the property had been paid for not only with the $17.5 million that it was paid for but a chattel as well, then the transaction legally would have to be characterised as not a straight sale but as an exchange. The contract would then be an agreement for the exchange and would presumably be entitled to the relief under section 55(3), which is another reason why, in our respectful submission, the legislative intent is as we say it is.
CALLINAN J: Mr Russell, can you assist me with the document at page 137, the Chief Justice referred to it before. It is "FORM 24 - PROPERTY TRANSFER INFORMATION" and it says the "FORM MUST ACCOMPANY . . . FORM 1", which is the actual transfer itself, I think, which is the preceding document, is that right?
MR RUSSELL: Yes, your Honour.
CALLINAN J: Where does this document go? It looks rather like the document that used to go to the Stamp Office.
MR RUSSELL: No, your Honour.
CALLINAN J: It does not because I see it must accompany the Form 1 but it contains the - - -
MR RUSSELL: My instructions are that the normal conveyancing practice is that this is sent out to local authorities and Land Tax Office, if applicable, and so on, but it has to go in, so it serves a number of purposes.
CALLINAN J: But is not a dutiable document.
MR RUSSELL: It is not a dutiable document, no, your Honour.
CALLINAN J: The conveyance is the dutiable document which is the preceding page.
MR RUSSELL: The preceding page, yes, your Honour.
GUMMOW J: It is Form 24 under what - - -
CALLINAN J: It under the Land Act 1944 , is it not, the Land Title Act?
MR RUSSELL: Land Title Act, your Honour. It is Land Title Act. The Land Act 1944 would only apply if you were dealing with leasehold land, Crown leasehold, which does not apply here. The Land Act deals in Queensland - - -
GUMMOW J: I know that, but this is the ordinary Torrens System.
MR RUSSELL: Yes, Land Title Act.
GUMMOW J: So it is the Land Title Act?
MR RUSSELL: Yes, your Honour, 1994. It appears at the top of the form on page 136 of the original appeal book or 137 of the amended appeal book.
GUMMOW J: , yes, it does.
CALLINAN J: I take it that it is common ground this is not a dutiable instrument?
MR RUSSELL: It has not been assessed, your Honour. As your Honours might conclude, the instruments of which the Commissioner forms the view that they are dutiable in Queensland really remain not assessed.
GLEESON CJ: I am looking at the document on page 138.
MR RUSSELL: Yes, your Honour.
GLEESON CJ: I am not sure what the relevance of that is, but that is sent by the solicitors for your clients, is that right?
MR RUSSELL: Yes, this is the Form 24, property transfer form, or the Creagh Weightman letter?
GLEESON CJ: No - I am sorry, we are back in this problem about the numbering. It is "F", from Creagh Weightman. It says:
Cromwell Property Securities Limited is the responsible entity and trustee of the Scheme and is the proper party to be nominated as Purchaser in the Contract of Sale.
Then it refers to a "Custody Agreement", and says:
The role of Trust Company of Australia Limited is limited to holder of the legal title pursuant to the Custodian Agreement.
What is the point being made in that letter?
KIRBY J: To try and wriggle out of the statute.
GLEESON CJ: It seems to wriggle into it.
MR RUSSELL: It was really, we would say, to explain to the Commissioner why a conveyance is - I mean, what is enclosed is both the contract and the transfer, and there is an attempt to explain why it is that the transferee named in the transfer is not the same as the transferee named in the contract.
GLEESON CJ: Was Trust Company a trustee for Cromwell Property Securities Ltd?
MR RUSSELL: No, your Honour, it was a custodian of the scheme.
GLEESON CJ: Well, it says, it was the holder of legal title. Its role is "limited to holder of the legal title". Who was the holder of the beneficial title?
MR RUSSELL: The scheme members, your Honour. This is a public investment.
CALLINAN J: Well, I do not understand why Trust Company is not a trustee. It had no beneficial interest in the property at all, did it?
MR RUSSELL: That is correct, your Honour, yes. It held it as custodian under the Managed Investments - - -
CALLINAN J: Well, you say "custodian", but why could you not say "trustee"? You use "custodian" because, presumably, the relevant legislation uses the word "custodian", is that right?
MR RUSSELL: Yes, that would be the reason.
CALLINAN J: It looks like a trust agreement to me.
MR RUSSELL: Well, it is certainly an agreement whereby the legal title would be held and the rights attaching to ownership of the legal title would be exercised in a particular way.
CALLINAN J: Well, there is a right of indemnity, is there not, from the beneficial owner?
MR RUSSELL: Yes.
CALLINAN J: It seems to have a lot of hallmarks of a trust.
MR RUSSELL: Yes. The scheme constitution is not before the Court, but the Corporations Law, section 601FC - - -
GUMMOW J: They talk about responsible entities, do they not?
MR RUSSELL: Yes, and provide that - - -
GUMMOW J: To operate the scheme.
MR RUSSELL: And then provide that the responsible entity has the duties of trustee and goes on - - -
GUMMOW J: But I do not see where it says it takes the title.
GLEESON CJ: The responsible entity, according to this letter, was Cromwell Property Securities Ltd.
MR RUSSELL: That is correct, your Honour, yes, because under the legislation one can either take the title oneself - that was not possible for Cromwell because of the conditions attached to its licence - so one can alternatively appoint a custodian to hold the property. That is what happened in this case.
GLEESON CJ: But as its name might suggest, Trust Company of Australia Limited was a trustee, was it not?
MR RUSSELL: Yes, your Honour. There is no doubt about that, your Honour.
KIRBY J: But its primary character in law was the character that was stamped on it by the federal legislation.
MR RUSSELL: Yes.
HAYNE J: Namely, the character stamped on it by 601FC(2):
The responsible entity holds scheme property -
I would have thought this was -
on trust for the scheme members.
MR RUSSELL: Yes, but, your Honour, Trust Company of Australia Limited was not the responsible entity. Cromwell Properties Ltd was the responsible entity.
GLEESON CJ: So there was a sub-trust, was there not? I am looking again at this letter at page 138, which at first sight might have seemed to say that Trust Company was only going to hold the legal title - was going to hold them on trust for Cromwell Property Securities Ltd as the responsible entity and trustee of the scheme, which, in turn, would hold it on the trust of the scheme.
MR RUSSELL: We would say its equitable obligations probably subsist in favour of the members of the scheme. I mean, it is certainly subject - as is clear from the custodianship agreement, of which there are two copies in the appeal papers, that it must deal with the property substantially in accordance with the directions of Cromwell. But if it were to act in breach of its obligations and that caused loss to the scheme members - - -
CALLINAN J: Mr Russell, if you look at clause 4.1(b) of the custody agreement at page 24, you will see that:
it is intended that the Custodian's duties will be . . .
(b) to hold the Scheme Property . . . on the Manager's behalf -
and then the manager itself has what I will call - it may not be strictly accurate - but obligations as a trustee and manager. Is that not right in respect of the beneficial owner?
MR RUSSELL: Yes, your Honour.
CALLINAN J: So there is no reason why there may not be two different trusts or two trusts, is there?
MR RUSSELL: Yes, on that analysis there is something probably very close to a bare trust in favour of Cromwell, the sub-trusts arising under subsection 601FC(2).
GLEESON CJ: Yes.
GUMMOW J: Justice Hayne draws attention to 601FC(1)(i). One of the obligations of Cromwell as responsible entity was to:
ensure that scheme property -
was -
held separately from -
Cromwell Properties' property.
MR RUSSELL: That has been interpreted, your Honour, as simply requiring that it keep the property in a separate fund rather than as requiring always that scheme property must be held by a custodian.
GUMMOW J: It would at least be consistent with what Trust Company was doing here, I suppose.
MR RUSSELL: Yes.
GLEESON CJ: I would venture to suggest that Trust Company of Australia Limited did not include this property in its assets for the purpose of its balance sheet.
MR RUSSELL: Of course not, your Honour, no.
CALLINAN J: Mr Russell, this legislation, the management legislation and the separation, was aimed at Skase-type situations, was it not, Mirage, where the manager was so closely connected with the trustee of the unit?
MR RUSSELL: Yes, it is part of a scheme of investor protection.
CALLINAN J: Exactly, to prevent unscrupulous entrepreneurs from holding the property as well as managing it, theoretically on behalf of the beneficiary.
MR RUSSELL: Yes, I mean the theory underlying it, one would imagine is that whereas in a situation where you had a dishonest responsible entity, the responsible entity could, in some way, convert the property to its own use if it is in the hands of a reputable trustee company or someone who has a licence to do this sort of thing.
CALLINAN J: And who can be regulated and is regulated.
MR RUSSELL: Yes. Your Honour Justice Hayne was asking about subsection 601FC(1), I think subparagraph (i), and the requirement to hold property separately. Your Honour will recall from the conditions imposed in the licence, which are on page 14 of the appeal book, that it would seem fairly clear from condition 10 that in some circumstances, at least, the licensee is not required to appoint a custodian. So the ASIC view of that provision would clearly be that it does not require a custodian in every case; it requires a custodian in some cases, and they are the ones set out in the licence condition.
CALLINAN J: Mr Russell, is there any provision in the Stamp Act 1394 relieving beneficiaries from payment of ad valorem duty upon the transfer by their trustee of property to the beneficiaries?
MR RUSSELL: If stamp duty has been paid on the declaration of trust, your Honour, then a conveyance to beneficiaries in accordance with the - - -
CALLINAN J: What section is that, Mr Russell?
MR RUSSELL: It is in the exemption to the conveyance or transfer head of charge, your Honour. The technical answer is it is paragraph 4 of the - - -
CALLINAN J: Do we have that? We do not have that, do we?
MR RUSSELL: Yes, it is our learned friend's outline, your Honour, at the back of the outline. There are four subheads of duty in the conveyance or transfer head of charge of which, if shares are not involved, the important one is paragraph 4 and then there are a series of exemptions from the normal ad valorem duty rights and conveyances by trustees that are:
made for the sole purpose of -
this is the proviso paragraph (B) of subparagraph (iv) -
carrying into effect the terms of a settlement where duty has been paid at the ad valorem rate . . . under the `Settlement, deed of gift or voluntary conveyance' or `Declaration of trust' head of charge on an instrument relating to the particular property and whereby the property became subject to -
the terms and conditions of subsection 55B.
GLEESON CJ: So Cromwell Property Securities Ltd was the party that was putting up the money and Cromwell Property Securities Ltd was going to be the party who was beneficially the owner of the property which would hold its rights as beneficial owner on the trusts of the scheme?
MR RUSSELL: Yes, with this qualification, your Honour. When your Honour says Cromwell Properties was putting up the money, Cromwell Properties of course was putting up investors money.
GLEESON CJ: Quite.
MR RUSSELL: Dealing with the 1988 Act, if I could take your Honours to the explanatory memoranda in relation to that. That appears in Appendix 11 of our reply. Your Honours will see it was a very short second reading speech and what happened was explanatory notes were laid on the table at the House and the legislation was divided into provisions of two characters. The first are described as proposals of an anti-avoidance nature. The second at page 5865 of the parliamentary debates under the heading of "PROVISIONS TO GENERALLY TIGHTEN ACT". Then the particular amendments made to sections 53 and 54 are dealt with at pages 5867 and 5868.
At point 9 on that page your Honour will see there is a reference to the changed wording of section 54(1) and (2) as simply improving the wording. Certainly not, it is said, of doing anything else but changing the duty base. Then the issues that relate to sub-sales are dealt with in paragraph 4 which is at about point 10 of the page, "AGENT ACQUIRING FOR PRINCIPAL", and then there is a reference to the new subsections 53(9) and (10) and a reference to amendments to section 54(6) so as to correspond with the changes made in 53(9).
So we would say that there is absolutely nothing disclosed of an intention to depart from what, in our respectful submission, was by then a settled feature of the legislative scheme. That is the material we have on the legislative history of the matter, your Honours.
If I could just briefly go back to our outlines. At paragraph 9 we deal, broadly speaking, with the provisions of the Corporations Law and they are set out again in the decision of the Court of Appeal in the custody agreement. The effect of paragraphs 11, 12 and 13 we have discussed in answers to questions asked by your Honour. The first case which was put against us was the decision - the case on which we rely as supporting our view in relation to purchaser and saying that inappropriate - - -
GUMMOW J: The fact is there are no cases bearing directly on these questions.
MR RUSSELL: No, there are none, your Honour. There are cases which say that "purchaser" can take its meaning from the context. Your Honour will recall when the matter was last before your Honour we discussed the decision of Justice Dixon in Vickery v Woods [1952] HCA 7; (1962) 85 CLR 336, which is on our list. It was a contract entered into by the promoters of a company to be formed, which had not been formed at the time the contact was entered into. His Honour Justice Dixon, as he then was, at page 343 said this:
The contract itself was expressed as an acknowledgement of a sale to the appellant as agent for the Gunbar Pastoral Co. Pty. Ltd, and his signature as purchaser is qualified by the words "For Gunbar Pastoral Co. Pty. Ltd.". As that company had not yet been registered and so did not then exist, he must be considered as contracting so as to incur the liability of a principal; otherwise the contract would be inoperative. To avoid personal liability as a consequence, a clear expression of an intention not to be bound personally is necessary; the expressions used in this contract are not sufficient for that purpose. But, while the result is to make the appellant the person liable as the contracting party, it does not follow that the references to the Gunbar Pastoral Co. Pty. Ltd. are to be rejected from consideration for every purpose as if they are not present in the contract. They serve to indicate that the company is the intended transferee of the land and I am disposed to think that as a consequence the expression "purchaser", in the provision relating to the vendors' obligation to procure registrable transfers, should be interpreted as covering the company on its coming into existence.
Then there is a reference to the obligation to convey "to the purchaser or as he shall direct" - - -
GLEESON CJ: Now, that expression "covering the company" is not quite the same as "meaning the company", is it?
MR RUSSELL: I suppose technically including rather than meaning, but certainly his Honour did not have a problem with the notion that the term included a reference to the intended transferee. It is construing a private document and not a statute, so we would have to concede that it is in no sense direct authority but it does indicate that in some cases at least the court has been prepared to regard the expression "purchaser" as comprehending an intended transferee.
The case that is put against us, both below and here, is the decision of this Court in Dudley Buildings v Rose [1933] ArgusLawRp 29; (1933) 49 CLR 84. The relevant pages of the judgment are pages 92 and 93, which was the decision of Justice Rich, of 94 and 95, the decision of Justice Starke, and 97, the reasons of Justice Dixon. In our respectful submission, they do not really address this question at all:
upon full consideration, I have come to the conclusion that what is stated in the text of the contract necessarily involves the result claimed by the appellant.
GUMMOW J: You deal with this, I thought, quite succinctly at paragraphs 36 and 37 of your outline, which seemed to put it in a nutshell.
MR RUSSELL: Yes. In our respectful submission, the situation in Dudley Buildings was that the company in question had never become a party to the contract and the Court said so. In our respectful submission, that and other cases that relate to nominees are really not relevant. This is not a situation where the person entitled to a conveyance under the contract has said, "Convey to somebody else". This is a situation where the conveyance is to the only person to whom the conveyance could have been made pursuant to the contract.
Perhaps the case that we do need to spend a little time on is Pendal Nominees [1989] HCA 19; (1989) 167 CLR 1 which is the case relied on by our learned friends. That was a case in which property was transferred to the trustee of a unit trust and it was provided that a subsidiary of the trustee of the unit trust would take the transfer. Because the New South Wales provision took the form it did, there was no question about the conveyance, in pursuance of the contract, attracting liability to duty and, indeed, that it was not stamped appears from the reasons.
What happened though was that in the document the trustee, or the company that was to take the transfer, said that it would hold it as trustee. So, the issue arose in New South Wales was that a declaration of trust head of - within the then declaration of trust head of charge and the Court had to consider two issues. The first was whether the instrument dealt with separate and distinct matters which, if it did, meant that potentially both the agreement - the sale head of charge was dutiable and the declaration of trust head of charge was applicable and if the declaration of trust head of charge was applicable, whether exemptions created under that head of charge would be applicable.
The form of the contract appears and is discussed at some length on pages 6 and 7 by his Honour the Chief Justice. It appears at page 7 that Pendal Nominees had not given warranties but that it had agreed to covenants which enabled the provisions of the sale deed to be enforced against it. So it was a party to the sale. As part of the claim that Pendal Nominees made for an exemption from duty, it argued that paragraph 1 of the exemptions to the declaration of trust head of charge would apply. The head of charge is set out at page 8 of the judgment of the reasons of his Honour the Chief Justice at about point 2:
Any instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person or persons who have actually paid the purchase-money therefor.
The sections of the judgment of his Honour the Chief Justice which are put against us start at about point 8 on page 16:
However, it is unnecessary to rest my decision on this ground because there is in my view a compelling ground for excluding the operation of par. (1) in this case, namely that P.N. cannot be said to be the "apparent purchaser" of the shares. Not only does the sale deed recite that B.T.A. is the purchaser of the shares, but it is clear from its terms that B.T.A. is to provide the purchase money and that P.N. is merely to be the transferee. P.N. is not the "purchaser" in the ordinary sense of the word and I see no reason to give the word any meaning in this context other than its ordinary sense.
Moreover, par. (1) is concerned with the situation in which a document reveals a certain person as the purchaser of property and does not reveal that another person has "actually paid the purchase-money", but contains a declaration of trust by the "apparent purchaser" in favour of that other person. This is not the situation in the present case. Furthermore, the situation envisaged by the paragraph is one in which the law would ordinarily impose a resulting trust in favour of the provider of the purchase money, and par. (1) is therefore concerned with a declaration which does no more than record the existence of such a trust -
Justices Deane and Dawson dissented. Justice Toohey made observations to similar effect on page 32 at about point 2:
The Court of Appeal was right in concluding that par. (1) of the Declaration of Trust was inapplicable. Pendal was not the purchaser of the shares nor was it the apparent purchaser. It was B.T.A. which answered those descriptions . . . Further, the deed obliged Pendal to hold the shares as nominee for B.T.A. It may be noted that s. 73(1) of the Act excludes from liability for ad valorem duty as a conveyance various instruments -
and your Honours will see the scope of the exemption there. Justice Brennan agreed with Justices Toohey and Mason.
We would respond to the observations of his Honour the Chief Justice by saying in the first place if one looks at the rights of the parties here, it is not correct to describe Trust Company of Australia Limited as a mere nominee. It is named in the contract. It has significant rights under the contract. It has obligations under the contract. So that to treat it as merely a bystander that is going to do nothing but accept the title does not reflect its responsibilities both under the custodian agreement and under the Managed Investments Act. The other point that we would rely - - -
GLEESON CJ: That is the way it was described in the letter on page 138, is it not:
The role of Trust Company of Australia Limited is limited to holder of the legal title - - -
MR RUSSELL: We would be very surprised if the Australian Securities and Investment Commission accepted that as a description of the role of the custodian, your Honour. It would serve no purpose of investor protection if that is all a custodian did.
CALLINAN J: It does not do anything else really, does it? Is it not always obliged to act on the directions of the manager?
MR RUSSELL: Proper instructions they are called, your Honour,
CALLINAN J: Directions.
MR RUSSELL: But if those instructions were unlawful, as we apprehend the position, then not only would it not be obliged to act on them, it would be required not to act on them.
GLEESON CJ: Well, the role of holding legal title is important. It means that it will hold legal title and not transfer it to the general manager of the - - -
MR RUSSELL: Yes. To treat it as a mere nominee answerable on direction and decipher does not properly accept its role. So that, in our respectful submission, is the distinction in fact. The other point is that we would say that all the legislative history to which we have referred the Court provides ample reason to say that if his Honour the Chief Justice is right in saying that it is not the purchaser in the ordinary sense of the word, there is here a reason in this context to give the word a meaning other than its ordinary sense.
GLEESON CJ: Well, Pendal Nominees would be very strongly against you if you argued that it is an either/or situation and you have to choose which of Cromwell and the Trust Company is the purchaser, but I do not understand you to put your argument in that way - - -
MR RUSSELL: No, we do not. Your Honour will recall asking a question, and I hope I rejected what seemed to me at the time to be a fairly unattractive proposition from our perspective. It is sufficient for our purposes that one can say that it is a purchaser, and it may be that the Stamp Act requires the word "purchaser" to mean something different in different cases. Certainly, if one goes to other cases in the stamp duty context - Littlewood Mail Order Stores Ltd is on our list for example - the concept of purchaser and transferee are regarded as simply exchangeable. So that in a stamp duty context we would say that the intended transferee is the purchaser, but that if it is necessary to find a special meaning arising out of the legislative intent in section 54(6), then it is certainly to be found here.
KIRBY J: The Act does not talk of "a purchaser" though, does it?
MR RUSSELL: No, it talks about "the purchaser", your Honour; that is why we say it is - - -
KIRBY J: And it would never do so because it would have to assign the particular person upon whom the duty devolved to pay.
MR RUSSELL: In Queensland liability is joint and several, your Honour; we do not have the New South Wales concept of a person primarily liable for duty. Anyone who signs the instrument is liable to pay it.
CALLINAN J: Mr Russell, 54(1) speaks of the person "entitled to the conveyance or transfer", whereas 54(6) talks about "the purchaser". Does anything turn on that?
MR RUSSELL: Those amendments were made by the Act in 1988 to which I took your Honour.
CALLINAN J: Yes.
MR RUSSELL: Certainly if anything turns on them in the sense that they produce a different outcome, it is clearly an unintended one when one looks at the parliamentary materials.
CALLINAN J: Well, 54(1) seems to contemplate a transfer, one transfer, to a person entitled under the contract pursuant to that contract.
MR RUSSELL: Yes.
CALLINAN J: And the appellant would answer that description, is that not right?
MR RUSSELL: That is correct, your Honour.
CALLINAN J: So the only question arises whether - - -
MR RUSSELL: Whether there is a disconformity between the liability to charge in subsection (1) and the exemption in subsection (6). We would say this if that is truly the position, that one of two words in subsection (6) on that basis has to give way, because subsection (6) starts off with the proposition:
Where duty has been duly paid in conformity with the foregoing provisions -
So it says if you pay duty, something happens.
CALLINAN J: And unlike a sub-purchase, there is only one transaction?
MR RUSSELL: Yes.
CALLINAN J: Only one payment of the purchase price?
MR RUSSELL: That is right.
HAYNE J: Can subsection (6) be engaged where the second part of subsection (1) is engaged? That is, if you go to subsection (1) you find it deals with:
any contract or agreement for sale of any property -
one link, but it deals also with:
any contract or agreement whereby a person becomes entitled or may, provided the terms and conditions thereof are met, become entitled to the conveyance -
If the second half of 54(1) is engaged, that is, you identify the contract as one under which a person may, provided the terms and conditions are met, become entitled to conveyance, can (6) have any relevant operation in such a case?
MR RUSSELL: Yes, in our respectful submission. The added words are there to deal with - there was an argument in Queensland that one was not caught by subsection (1) if the contract was conditional, but the normal rule in relation to stamp duty is that the liability of an instrument to duty is determined at the time of its first execution.
HAYNE J: Whether the second limb of (1) has any application to this contract may depend upon how you read "may, provided the terms and conditions thereof are met, become entitled". This contract provides that if terms and conditions are met the present appellant will become entitled. It is not simply possible but it will happen, but leave aside the difficulty that may be implicit in applying that second limb to this case, in a case in which the second limb applies, can (6) operate?
MR RUSSELL: Yes, we would say, at least, in the context of - - -
HAYNE J: If that is so, what does it say about "purchaser"?
MR RUSSELL: We would say that a conditional contract would be within the second limb of subsection (1) and not the first, but we would say that the conditional contract, if produced for stamping, would entitle one to the relief under subsection (6) and, in answer to your Honour's question, the purpose of subsection (6), as we have said - the expression "purchaser" has to be construed, we would say, so as - - -
GUMMOW J: You construe "purchaser" in (6) having regard to all the machinery of (1).
MR RUSSELL: Yes.
HAYNE J: Including, for example, voluntary transactions made under seal which fall within the second limb of 54(1), there being no consideration.
MR RUSSELL: Yes, and the alternative - - -
GUMMOW J: "Purchaser" in (6) is the compendious expression, given all the convolutions of (1).
MR RUSSELL: Yes. It is the intended transferee, we would say. Otherwise, one gets to the result - I mean, it is matter on which your Honour Justice Kirby dealt with in an earlier judicial role. What happens if an instrument - - -
KIRBY J: Not in Pendal, I hope, because I was reversed by majority there.
MR RUSSELL: No, your Honour, although your Honour was against us on the declaration against - it was in favour of our learned friend's position on the declaration of trust head of charge. The normal position in stamp duty cases is if an instrument falls within several heads of charge the Commission can choose whichever he wishes to charge the instrument. Inland Revenue Commissioners v Speyer is authority for that proposition. So, a barter transaction, now, is technically within 54(1) as well as within 55(1) - I am sorry, an exchange transaction.
Yet, plainly, if the agreement in relation to the exchange is in conformity with the contract, you get the exemption under 55(3). If you are assessed under 54(1), then, on our learned friend's argument, you do not get the exemption. And one could take it a stage further. Suppose one has an exchange but does not have a written agreement. There would be nothing on which 55(1) could operate. Section 54(4) would operate, because there is an acquisition of property by a company - if there is a company involved, because there is a conveyance in money or money's worth and, on our learned friend's argument, you do not get the exemption. That is why we say that when one looks at the expression "purchaser" in context, it really does cover the intended transferee.
GLEESON CJ: Mr Russell, how long do you expect to take to complete your argument?
MR RUSSELL: I think I have just about finished, your Honour. I was about to say, those were our submissions, your Honour, unless there is any particular aspect - - -
GLEESON CJ: Do not let us stop you.
MR RUSSELL: No.
GLEESON CJ: Very well, thank you.
MR RUSSELL: Perhaps if I could just take your Honour to one last set of words in Littlewoods Mail Order Stores Ltd v Inland Revenue Commissioners which - - -
KIRBY J: You are not trying to spin it out to lunchtime, are you?
MR RUSSELL: No, your Honour. I literally will be a minute. If one goes back to the example I just gave to the Court, one has precisely the situation that, on our learned friend's argument, in the context of an exchange, if a company is involved, you get a situation where, if there is an agreement for exchange, it is dutiable at ad valorem rates and the subsequent exchange is exempt under section 55(3). If there is not an agreement for exchange, then section 54(4) applies and the certificate of incorporation of the company is stamped at ad valorem rates and, on our learned friend's argument, because there is no purchaser, you do not get the exemption under 54(6).
Lord Reid concluded his reasons for judgment in Littlewoods Mail Order Stores [1963] AC 135, and the section to which I was going to refer your Honour - the extract starts at page 159, at about point 7:
It would be quite unreasonable to hold that Littlewoods would keep their exemption if the beneficial interest came to them from Oddfellows by one kind of instrument but lose it if by another kind of instrument. Such an intention could not be attributed to Parliament unless the words of the Act leave no alternative.
For completeness, if your Honours do not have a copy of section 55 in its current form, I will hand it up.
GLEESON CJ: Thank you.
MR RUSSELL: Those are our submissions, if the Court pleases.
GLEESON CJ: Thank you. We will adjourn until 2.15.
AT 12.47 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.15 PM:
GLEESON CJ: Yes, Mr Dorney.
MR DORNEY: Thank you, your Honour. Your Honours, if we might start first with the word processing part of the document and the standard form part of the document. I only raise this issue to show that the contentions that we raise - we are happy enough to deal with this on the basis of the standard commercial conditions as altered and the special conditions. But if one turns to appeal book page 67 - - -
KIRBY J: Justice Callinan hinted that the standard form is pursuant to some statutory charter, is that correct, or have I misunderstood?
MR DORNEY: No, the standard form is an agreed - there is no statutory standard.
KIRBY J: I see, it is purely the Law Society put together for the benefit of its members.
MR DORNEY: Yes.
CALLINAN J: It is done by the Real Estate Institute and approved by the Law Society.
MR DORNEY: Yes, your Honour, with obvious input from the Law Society as to legal matters. If one turns then to appeal book page 67, condition 31 - and this is the point that your Honour the Chief Justice brought up before - the reference there is to Item B. Now, clearly that really should have been struck out as a relevant clause here because the only meaning one can give to 31 in that State is that Item B referred to the agent and therefore it just confirms, of course, the view, if one turns back to appeal book page 47, when Item B, in fact, is stated there. It clearly is not the agent and what the word processing system has done is to insert the word "custodian".
KIRBY J: You have plunged straight into the fine detail, Mr Dorney, but I would like, at some stage, for you to say your grand theory of the case so that I can, as it were, look at your little bits and pieces and the like - - -
MR DORNEY: Indeed, your Honour, and I will come to that next.
KIRBY J: All right. It is just that I have got used, in my youth, to sermons, and you have a text and then you heard all the detail and pondered upon the text in comparison with it.
MR DORNEY: Indeed, your Honour, and we will go to the legislation which is obviously the text in this case. That was all I wanted to say about that issue. It does demonstrate that the word processing system was used in this case, and that is why "custodian" appeared in Item B.
I will then plunge straight into the history of the legislation. I do so for this reason: when you look at the history, it is clear that what has originally happened is when the amendments of 1918 occurred, what was struck out were the other kinds of transfers, that is, not to the purchaser but, as stated in the old version of the Act, sub-purchasers, other persons on his behalf obeys direction. That is, sub-purchasers, if you like, by agents or by direction.
What thereafter happened was a controlled reintroduction of those kinds of exclusions that were knocked out in 1918. If one looks at it in that sense, then the word "purchaser" that was originally there really should bear the meaning right through to the present time, subject to the amendment of section 54(1), for contracts of sale. So if you are looking at section 54(6), the word "purchaser" there, taken from the original version before it was amended in 1918, which appears, of course, in Appendix 1 of the appellant's submissions in reply, means that what you then have was, in fact, this controlled reintroduction. As you trace through the amendments to the legislation that occurred, one can see that that is exactly what happened.
KIRBY J: It is a bit unfair what you are doing, though, is it not? I mean, one reaches the point where I would not be straining to find an interpretation of the statute that prevented you getting away with this.
MR DORNEY: Your Honour, we submit it is the only sensible way to approach the construction of "purchaser" in a subsection that has been there from the beginning and has been subject to a number of amendments. When you look at the other amendments - - -
KIRBY J: You seem to be taking a very literalist approach to the statutory construction.
MR DORNEY: Your Honour, we are, but we say that in fact there was good basis for doing so because of the way in which the legislation evolved and the way in which the other subsections and other sections such as 53 were then modified to take account of the reintroduction of the exclusions.
KIRBY J: And the way the Parliament later amended the legislation to prevent the injustice of which I have just been speaking.
MR DORNEY: Indeed, your Honour, and which we would submit shows that in fact on this particular occasion when it reintroduced that legislation under the principle of the Dunmunkle Case that it does show that that is exactly the interpretation that - - -
CALLINAN J: Mr Dorney, you may not have seen it but a case that was reported in the Australian Law Journal in the last part of December - - -
KIRBY J: Surely you have read all these.
CALLINAN J: Commissioner of State Revenue v Pioneer Concrete, the joint judgment at paragraphs 51 and 52 casts considerable doubt on the so-called Dunmunkle principle.
MR DORNEY: Well, we would submit that it does not cast doubt. What it brings up for consideration once again is the difficulty of applying the principle in any particular case.
CALLINAN J: It may.
MR DORNEY: Your Honour, we would submit that that particular judgment does not say that the principle of Dunmunkle really cannot be applied ever.
GUMMOW J: The principles of what?
MR DORNEY: Dunmunkle. What Justice Dixon said there, that you can look at later legislation if there is ambiguity to give some interpretation to what the legislature meant in the earlier part of the legislative - - -
GUMMOW J: I have doubts about all of that.
MR DORNEY: Your Honour, we do not press it except to say that we have set out in our outline, and we do not say any more than what we have said there.
GUMMOW J: What I would be assisted to know is how you construe 51(4) and 54(6) as they now stand.
MR DORNEY: Yes, your Honour. I will jump straight to there, your Honour. If one takes the history that I was going through, then up to the time that section 54(1) was amended we would submit it was clear that "purchaser" meant the purchaser in the way that, as we will come to later, the High Court, we will submit, has interpreted it as well.
GUMMOW J: Well, that is the problem.
MR DORNEY: When section 54(1) came in - - -
GUMMOW J: Section 54(1) does not talk about "purchaser".
MR DORNEY: No, it talks about contract of sale, your Honour, and it did right up to 1988 when the amendment to subsection (1) was introduced.
HAYNE J: Do you say that (6) can have any operation in respect of the second level of (1)?
MR DORNEY: Our primary submission is it cannot.
HAYNE J: Why not?
GUMMOW J: Why not?
MR DORNEY: Because the legislation did not intend "purchaser" to be interpreted in any other way.
GUMMOW J: When you say "intend", that is what we are deciding, or construing it.
MR DORNEY: Yes, your Honour.
GUMMOW J: Having regard to the level of some of the parliamentary debates in your State, I am rather reluctant to enter into - - -
MR DORNEY: We do submit, if your Honours are against us in that, then the proper way to interpret subsection (6) in light of subsection (1) is to take its meaning from the various things that can occur, that is, be informed by what subsection (1) governs such that if you have a contract of sale then the word "purchaser" - - -
GUMMOW J: Why would one construe (6) in such a way that would leave a gap between (6) and (1) which produces this situation?
MR DORNEY: Your Honour, I have submitted that if in fact your Honours are against me on that issue then I will move to the next issue, which is - - -
GUMMOW J: I am not against you on anything. I am just trying to find out what you are saying.
MR DORNEY: Your Honour, our primary submission is that subsection (6) has nothing to say about the second part of subsection (1). As I say, if your Honours are against us on that, we submit that informed by the various things that can occur in subsection (1) - - -
GUMMOW J: Wait a minute, just before you jump away from that, what does "purchaser" then mean in (6)?
MR DORNEY: I am just coming to that now, your Honour. So far as subsection (1) talks about contracts of sale, "purchaser" in subsection (1) means what we would submit has been long understood - - -
GUMMOW J: There is no reference to "purchaser" in subsection (1).
CALLINAN J: No.
MR DORNEY: No, but there is a reference to "contract of sale", your Honour.
GUMMOW J: Of course.
MR DORNEY: Yes. In a contract of sale one has a purchaser.
GUMMOW J: Yes, but what does that mean? You say you have a purchaser. What is the purchaser?
MR DORNEY: The person who has the purchaser's obligations under the particular contract or agreement.
GUMMOW J: Is that right?
HAYNE J: At some point you are going to have to grapple with the words and you are going to have to grapple with the words of (1) and grapple with the words of (6).
MR DORNEY: Yes, your Honour.
HAYNE J: "Purchaser" does not appear in glorious isolation in (6). It is used in the expression:
conveyances or transfers made to the purchaser -
It may be that "made to the purchaser" is to be read back to the earlier words "the conveyance or transfer", singular. It may not be. I do not know, but can we grapple with the words rather than talk in generalities.
MR DORNEY: Yes, your Honour. Subsection (6) when it refers to "purchaser" refers to contract of sale - the purchaser under the contract of sale.
GUMMOW J: Yes. What do you mean by the purchaser under the contract of sale?
MR DORNEY: The one who has those obligations - - -
GUMMOW J: Just a minute, when you are talking about this tripartite arrangement here.
MR DORNEY: Yes, your Honour.
GUMMOW J: We all know what it means when it is just A and B. You have A, B and C, and that is the problem.
MR DORNEY: Indeed, yes. Your Honour, we will go through the conditions a little later but there is no obligation placed on this transferee, unless, of course, with respect to the right to obtain the transfer the correlative might be taken, therefore, the obligation to take the transfer. But if you look through the terms of this contract of sale, and we will submit in the context of the custody agreement, that this particular transferee takes none of the obligations of a purchaser. It certainly obtains the right under contract, subject to specific performance, to obtain the duly executed transfer in its name.
Your Honours, merely to make that a contractual right rather than having been a contractual right of a purchaser where a nominee is outside the contractual relationship, we submit does not advance the matter much further. Obviously, it advances it to the extent of being a contracting party but does it advance it to the extent of undertaking the usual obligations of a purchaser?
The usual obligations of a purchaser, we submit, are those that are set out in the High Court cases we referred to and in that extract from Fry on specific performance: the obligation to pay the purchase price; the obligation to take the risk of the property, from the time of the contract; and one other being, of course, the obligation to take the property itself, so as to relieve the vendor of it. But, of course, that can be contracted away, and merely because that aspect is contracted away does not mean that when all the other obligations are on somebody else that the transferee becomes the purchaser and that other person - - -
GUMMOW J: Do you say that there is no purchaser, or do you say there is a purchaser but who never had any contractual right to receive the conveyance - - -
MR DORNEY: We say, there is - sorry, your Honour.
GUMMOW J: - - - which is this contract?
MR DORNEY: Yes, your Honour. We say the purchaser is Cromwell.
GUMMOW J: But it is a purchaser even though it never had any contractual right to call for a conveyance to itself, or to anybody it nominated, for that matter.
MR DORNEY: Because it negotiated that right away. In a moment I will come to the reasons why we say, in this case, on these facts, that is exactly what did happen.
CALLINAN J: Mr Dorney, I see "transferee" is defined in section 49. What is the purpose of that definition? Where is "transferee" referred to in the Act?
MR DORNEY: Your Honour, there are other sections, but it is not mentioned in 54.
CALLINAN J: No, I know, but what is the purpose of the definition? What sections is it referred to?
MR DORNEY: Well, section 49 certainly refers to transferee.
CALLINAN J: I just could not pick it up in 49, but it may be there. I do not know - it might help you, because it may be used in contradistinction from the purchaser, that is all.
MR DORNEY: Yes, your Honour. Well, it is not mentioned in 49 - - -
CALLINAN J: No.
MR DORNEY: The Schedule 1 heading that brings most of these matters to duty is "CONVEYANCE OR TRANSFER" and - - -
CALLINAN J: But transferee - - -
MR DORNEY: Yes, your Honour. If your Honour turns then to - - -
CALLINAN J: You might want to think about it - - -
MR DORNEY: Yes, your Honour. I might have my junior look at that.
CALLINAN J: - - - or ask your junior to have a look at it.
MR DORNEY: Yes, I will, your Honour. It was one of the assumptions that one makes of the definition because section 49 concerns itself with conveyances and transfers. Yes, I am sorry, your Honour.
Getting back then to the argument in this particular case, we take your Honours to the judgment of Justice Helman for the reason, we submit, that one can have a look at exactly the role that the appellant played in this case. If your Honours can turn to the appeal book at 159, line 33 - and we concede that this really is talking about an aspect for which special leave was not given, but we submit that its conclusion is still relevant. It is the last four lines of paragraph [24]:
Rather than demonstrating Cromwell's acting at the prior written behest of the appellant, the facts as they have been put to us reveal the appellant's acting at the behest of Cromwell. The recitals to, and clauses 2.1, 4.1(a) and (b), 4.2(a), 4.3, 4.8(a) of, the custody agreement show that.
His Honour had earlier analysed back at page 154 those particular provisions. Of particular importance is paragraph [13] on page 154. Clause 4.3 appears about line 34 and clause 4.8 appears at 44. The combination of those shows that the appellant was not to effect any transactions or effect anything concerning any transactions until it had received proper instructions. Clause 4.8(a), as is referred to in that part of the judgment, provided that the appellant would enter into contracts, contracts being defined to include this very contract when directed to do so by Cromwell in a proper instruction.
One then turns to those particular letters that the Chief Justice referred to, although your Honour referred to the one at 138, but if one also turns to the letter at 140 of the record - 138 we have dealt with. At 140 it says:
We act -
this is the solicitors on the record according to the contract for Cromwell -
We act for Cromwell Property Securities Limited ("CPSL") the responsible entity . . . which is purchasing property situated at 301 . . . pursuant to a Contract of Sale which has been lodged with you for the assessment to duty.
CPSL has appointed Trust Company of Australia Limited as its agent . . . to hold scheme property on behalf . . .
You have proposed to release the stamped transfer -
We submit that that, while it cannot govern the interpretation of the agreement, does show that on the facts of this case what has occurred is that Cromwell has given the proper instructions and thereby directed the appellant to become the party who accepts the transfer subject to the agreement. That is, in the context of this case and in the context of the managed investments scheme, in the context of having a custodian directed by a responsible entity, what has happened is that in this contract the contractual terms in the sense of being decided by, we would submit, on the finding made by his Honour Justice Helman, by the vendor and the named purchaser, that is Cromwell. So, what in reality - - -
KIRBY J: To some extent they were decided by the federal legislation - - -
MR DORNEY: Yes, and they were governed by that because they could not really go outside that.
KIRBY J: Exactly.
MR DORNEY: But it was open of course even under that legislation to have the appellant as the named purchaser. That way was open to them. There was nothing in the federal legislation which prohibits that method of the trustee obtaining the property. One might have needed - perhaps the guarantor was to the payment of the purchase price or something, but there is nothing essentially that prevented this particular appellant becoming the purchaser under the agreement.
KIRBY J: Nothing under the federal Act that would have prevented them?
MR DORNEY: Your Honour, we might just hand up - we realise that in fact your Honours do not that provision, although I understand Justice Hayne may well have the particular sections. Justice Hayne referred before to 601FC(2), which is on the third of those pages:
The responsible entity holds scheme property on trust for scheme members.
And referred to various duties under 601FC(1), which is on the second page. It is also important to note that under section 601FB(2), which is referred to in the judgment:
The responsible entity has power to appoint an agent, or otherwise engage a person, to do anything that it is authorised to do in connection with the scheme.
Now, at this stage of course the legislation did not have the word "custodian" in it, but that appears to be the provision under which this appellant was appointed what is called the "custodian". Obviously then the trust that it had about the property then reflected in the trust that 601FC placed in the responsible entity.
KIRBY J: Is "custodian" a term of art in the federal Act?
MR DORNEY: It is, after the date of the relevant transactions, your Honour. It was obviously in the papers that were being produced at the time. Certainly in the dealer's licence that is in the record, it refers specifically to the "custodian". So in a sense it was a notion even at that time that this particular agent appointed under 601FB was in fact to hold this particular role, even though essentially the trustee was to be the responsible entity.
Given that background of the scheme, given these letters and given the finding by his Honour Justice Helman and the analysis of those particular provisions in the agreement, we submit in a sense all that has happened in this case is that rather than there be the common law right exercised by the normal purchaser to nominate the transferee, that the transferee has been joined in this particular agreement with in a sense the only right being to accept the transfer when executed. If you look through all the other changes they are really directed towards benefits that the transferee might get. We then might turn to the contract of sale, because we would submit that in reading it and with that background in mind, then one begins to understand exactly what was being done.
Your Honours have already been taken through the items which define - well, Item B is "custodian", Item E is "purchaser" and Item F "purchaser's solicitors". It perhaps is somewhat anomalous that the custodian does not have a designated set of solicitors. Certainly, when you turn to the execution page, the execution also has been done in those particular terms. This is page 49. The vendor was the vendor, the custodian signed under the word "Custodian" and of course the purchaser under the word "Purchaser". One turns though to particular provisions of the standard commercial conditions first - - -
KIRBY J: Where is "Custodian" on page 43?
MR DORNEY: On the execution page?
KIRBY J: Yes.
MR DORNEY: Sorry, it is the middle one, your Honour. I think it is obliterated - - -
GLEESON CJ: Between lines 25 and 30.
KIRBY J: Yes, I can see it, thank you.
MR DORNEY: If your Honour then turns to page 60 "STANDARD COMMERCIAL CONDITIONS", condition 3.1 and condition 3.2 is a condition as to the deposit which is placed solely on the Cromwell as the purchaser. The allied provision about the balance of the purchase price is at clause 13 at page 63 of the record, 13.1. So taking those two together one comes to the conclusion the only person obliged under this agreement to pay any money under the agreement was, in fact, Cromwell and the case stated says that that in fact happened.
One turns to clause condition 10.1 at page 62. The only change made to 10.1 is on the fifth line to delete "Purchaser" and insert "Custodian", but what it leaves is:
Subject to compliance by the Purchaser with the Purchaser's obligations under or by virtue of this Contract the Vendor shall as required do all acts and execute all documents necessary for the purpose of completing the sale and ensuring that the -
Custodian -
obtains a good and valid title.
Then goes down at the end:
shall be prepared by and at the expense of the Purchaser and delivered to the Vendor within a reasonable time prior to the Date of Completion.
So even with respect to the very transfer document itself, that is to be undertaken by no one but the purchaser. Condition 17.1 at page 65 - and I will refer to the extract from Fry's..... Condition 17.1:
The Property shall be at the risk of the Vendor until 5.00 pm on the next Business Day after the date of this Contract and then the risk shall pass to the Purchaser.
So the obligation with respect to the risk again does not pass to the transferee, it passes to the purchaser.
One can go through then a number of the special conditions, which I will do so briefly. On page 11 of our outline of submissions, we refer to - - -
GUMMOW J: What does it relevantly mean here to say that the risk passes to the purchaser?
MR DORNEY: Well, that should something happen to the property, then the risk is at the purchasers' responsibility.
GUMMOW J: Yes. So?
MR DORNEY: Well, I am saying, your Honour, that is one of, if you like, the obligations or one of the aspects - - -
GUMMOW J: It is not the obligation, it is a burden.
MR DORNEY: It may well be a burden, your Honour, but it is something undertaken only by what might be called the purchaser. I mean, if one looks at what kind of interest that might be generated in a person such as the purchaser named in this contract and those kind of- - -
GUMMOW J: Assume the building burns down and the vendor wants to force the title on the purchaser. What does it do here? Get specific performance, does it?
MR DORNEY: Yes, your Honour.
GUMMOW J: Against whom?
MR DORNEY: Against both the purchaser and, since you have a contracting party being the transferee, the transferee as well. If it wants to bind the transferee to take the executed transfer, the transferee must be a necessary party.
GUMMOW J: Is there any provision in here for requisitions?
MR DORNEY: Your Honour, I think they were waived. I might just go back.
GUMMOW J: Is there any clause in the standard form?
MR DORNEY: Your Honour, if one turns back to page 53 of the record, clauses 8 and 9 that deal with errors and misdescriptions and survey inspection do not apply. In fact, in 1.3 on page 53:
If there is any error . . . the Purchaser shall not be entitled to terminate -
the contract.
CALLINAN J: Mr Dorney, I think the transaction was completed within about four days of the execution of the document.
MR DORNEY: The transaction, no, it was in fact executed and transferred on the same day and the money paid.
CALLINAN J: All the necessary inquiries the parties must have thought had been made, I suppose?
MR DORNEY: Perhaps that is why that is there, but if one takes it happening on the same day it is entirely consistent with the notion that the appellant in this case really is just the transferee, that everything had been agreed and it was able to be completed in the single day. But the obligations generally cast upon by the purchaser were undertaken by Cromwell. Clause 2.2, where:
The Vendor warrants to the Purchaser that it has disclosed to the Purchaser all agreements and documents in its possession and control which would be material to a reasonable and commercial Purchaser.
Your Honours, I will not keep going through them but they are set out at page 11 of our outlines of submission, though I will go through special conditions 11.1 to 11.5 which were only briefly touched upon in our learned friend's outline. 11.1 is entirely consistent with those letters from Cromwell's solicitors that I took your Honours to before. They reinforce again the notion:
that the Custodian is a party to this Contract -
acknowledged by all parties to the contract -
solely for the purpose of accepting a transfer -
11.2:
The Purchaser acknowledges that the consideration for the payment of the purchase price . . . and other performance by the Purchaser under this Contract is satisfied by the Vendor complying with the transfer to the Custodian -
11.3:
The parties acknowledge that the rights of the Purchaser and the Custodian . . . are several -
So those obligations that are undertaken by Cromwell as designated purchaser, it is alone except when they are expressed to be joint. 11.4 and 11.5 are of course the interchangeable covenants between the two pursuant to the custody agreement which enables both parties then to perform the obligations that they give under the contract.
Your Honours, when one does that exercise of looking at the context or the surrounding circumstances of the scheme, the Act and the documentation in question and looks at those provisions of the custody agreement we took your Honours to before, we submit that the only conclusion that one comes to in this case is that on these facts you have a contract of sale and you have a person who has undertaken the responsibilities and obligations of the purchaser. We submit that that person can only be seen to be Cromwell and that therefore when one comes to the application of section 54(6), then that is the person who is able to get any benefits of exclusion from duty that occur.
We do say in our outline of submissions and were taken to task by it that this particular provision 54 has as a designed feature the nature of double taxation. In a sense it does because you have two taxing points that are addressed in it and when one has two taxing points then necessarily there are going to be cases in which the exclusions from the second taxing point do not cover every circumstance that might ever be considered. We submit that this is one of those but that is just a consequence of the proper interpretation of the legislation itself.
GLEESON CJ: Mr Dorney, I am only asking this question out of caution because I do not think it raises a matter that forms any part of the argument of either of the parties or was influential in the Court of Appeal, but assuming that Mr Russell's argument is right insofar as it says that the expression "the purchaser" in section 54(6) in a case such as the present is capable of, to use a word in one of the cases, "covering" his client, although it does not exclude Cromwell, does that have any consequence for the operation of any of the other provisions of the Act?
MR DORNEY: Your Honour, that would not if one came to the conclusion that on any particular contract of sale the obligations were such as between, say, two parties, that one could rightly interpret them as both having, if you like, purchasers' obligations and only one of them obtaining the title.
GLEESON CJ: I am asking the question because we have been concentrating on section 54 and I have to tell you that I am a total stranger to the rest of this Act, so I have no idea whether there are other provisions of the Act that might operate in an unexpected way if the construction for which your opponent contends is correct, and I do not understand you to say so.
MR DORNEY: Your Honour, in a sense we are about to come to that because if one interprets - informed by subsection (1), in particular - if you interpret "purchaser" there on a conditional contract, and the example was given of the voluntary covenant, then one must be exceptionally careful about how you interpret "purchaser" in that context because interpreting it widely will give rise perhaps to large scale avoidance because, unless one is careful about the meaning you give to the word "purchaser" outside the contract of sale context, then in fact what you are opening up is the potential for people to construct their agreements so that they get widespread exclusion.
For instance, the suggestion was made that really subsection (6) is the equivalent of inconformity with the contract, that is, the transfer given in conformity with the contract. Now, that clearly was section 41(1) in New South Wales. It clearly was not intended by the legislature here when they did the 1918 amendments and when they did the other amendments. They did not intend to say that anybody who obtained a transfer in conformity with the contract was excluded by subsection (6). So even the Vickery v Woods situation where you had a yet to be formed company but mentioned in the agreement, according to Justice Dixon, may well have come within the conformity of the contract.
GLEESON CJ: To somebody who is more familiar with the New South Wales legislation, the result for which your opponent contends does not sound surprising. Indeed, it is the result that would follow in New South Wales. But that is because the language of the statute is different and I am anxious to understand whether the argument for which he contends has any implications for provisions of the statute other than the one that we are concentrating on at the moment.
MR DORNEY: Your Honour, it has this, that taken on its face, the Lord v Trippe situation where the purchaser is the only other contracting party besides the vendor, has a common law right to nominate the transferee. In those particular circumstances, 54(6) would not operate and there would be, if you like, double duty.
Now, merely by putting a person in an agreement, if your Honours uphold this particular argument and do not really look at other than who gets the transfer, again it could open up unintended consequences that we submit the legislature never intended. That is, this is a person who is named in the contract or even a party to the contract. It does not have much to do. It does not have any obligations. But they are a party to the contract, therefore, so they are within the term "purchaser", accepting the transfer under subsection (6). So there are immense consequences of interpreting this widely in the history of this particular legislation which has specifically ruled out transfers by direction as having relief except in certain defined circumstances which essentially now have been reduced to an agent.
GLEESON CJ: Have we been shown the form of the amending legislation that was enacted to overcome this problem? Have we been shown how Parliament went about it?
MR DORNEY: Your Honour, it is in our material.
GLEESON CJ: Where do we see that?
MR DORNEY: Yes, I will turn to that, your Honour. Your Honours, down on the bottom right-hand side attached to our outline of submissions there is a lot of material. If you turn to page 62 of that, that is the Act that brought in the amendment. If one turns to exemption 23 which will be the one applicable here. Now, these are exemptions inserted in the Schedule 1 heading called "CONVEYANCE OR TRANSFER":
23(1) A conveyance or transfer of property from a person as vendor to another person as primary custodian for the responsible entity of a registered scheme.
(2) Subsection (1) only applies if -
and then a number of things are set out there.
GLEESON CJ: When the Parliament set about amending this to overcome the problem, it did not amend it to make the section, that is subsection (6), read the way your opponent wants it to read.
MR DORNEY: It did not, no, your Honour.
GLEESON CJ: It directed the amendment specifically to the position of a custodian under one of these schemes.
MR DORNEY: Indeed, your Honour, and we submit that to the extent to which the Dunmunkle principle does apply, this does indicate a view of the legislature that this was the only way to provide relief to this kind of transfer.
GLEESON CJ: Just forget about Dunmunkle for the moment.
MR DORNEY: Yes, your Honour.
GLEESON CJ: What would be the effect on the legislation as it now stands today of an acceptance of the appellant's argument about the meaning of section 54(6)?
MR DORNEY: Your Honour, of course this legislation being repealed only continues to apply to those contracts entered into before 1 March 2001.
GLEESON CJ: And supposing in relation to those contracts?
MR DORNEY: Your Honour, we would submit that on our interpretation one would have to apply this exemption to this particular case, because the legislation was not otherwise amended, so 54(6) remained as it was at the time that this particular transfer took place. The only way, therefore, for those things that occurred up until this amendment occurred would be to successfully argue, as our opponents have.
GLEESON CJ: Let me be more precise. Section 23(2) that we are looking at now qualifies subsection (1).
MR DORNEY: Yes, your Honour.
GLEESON CJ: If the argument against you is correct, what is the consequence of that upon the qualification in subsection (2) of subsection (1)?
MR DORNEY: Your Honour, it does not apply to the second part of section 54(1), that is for sure.
GLEESON CJ: I am just trying to understand what the consequences of a decision in this case will be for the legislation as amended, forgetting Dunmunkle.
MR DORNEY: Well, in this case the responsible entity was, we submit, the purchaser. You had the vendor - subsection (2)(a) would, therefore, apply to relieve in this case, if this legislation was applicable, this particular transfer - - -
GLEESON CJ: Let me put it slightly differently. If on its true construction section 54(6) uses the word "purchaser" to cover somebody in the position of the appellant, where does that leave section 23(2)?
MR DORNEY: Your Honour, it leaves it with no work to do because the exclusion is given by subsection (6) itself.
GLEESON CJ: Does that mean that the amendment will have misfired?
MR DORNEY: The amendment will have misfired if our learned friend's argument is accepted, yes.
GLEESON CJ: I am just trying to understand that.
MR DORNEY: I am sorry, your Honour. I did misunderstand you.
GLEESON CJ: I am not putting a consideration that seems to me to bear for you or against you. I just want to understand what we are doing and what the consequences of it will be for other provisions of the Act.
MR DORNEY: If your Honours accept the arguments put forward by the appellants in this case, subsection (6) would give them the exclusion. They would not need to refer to it.
GLEESON CJ: I understand that, but what would that consequence do to section 23, as introduced by Act No 48 of 2000?
MR DORNEY: It would render it meaningless in that particular context. There would be - - -
KIRBY J: Would it have work to do in another context?
MR DORNEY: Well, not in the context of the registered scheme, because - - -
GLEESON CJ: But it only applies to registered schemes.
MR DORNEY: I accept that, your Honour.
GLEESON CJ: There is no other context to which section 23 is addressed.
MR DORNEY: Indeed.
KIRBY J: So that essentially we come to the point that it would be concluded that Parliament had troubled itself to enact a provision that was not really necessary, but it would not be the first time that Parliament has made a mistake - - -
MR DORNEY: Indeed not.
KIRBY J: - - - assuming some amending legislation was necessary, which, in a current case, a court has said, "Well, you didn't really need to do that, because you've misunderstood your own statute".
MR DORNEY: Yes, your Honour - - -
GLEESON CJ: It goes further than that, does it not? It means that the qualification that Parliament imposed by subsection (2) upon the amendment it introduced in subsection (1) would have no work to do. So that the qualified indulgence, if I can use that expression, that was extended in the case of registered schemes would become unqualified.
MR DORNEY: Yes, but there would not be a need for this, your Honour.
GLEESON CJ: I understand that.
MR DORNEY: But, yes, that would be so.
GLEESON CJ: Now, subject to that, whatever that means, do you suggest that giving subsection (6) the interpretation for which your opponent contends would have any other effect, or is it - - -
MR DORNEY: We would submit that, your Honour, because, as we submitted before, if in fact a third party is joined as a contracting party without even perhaps what might be seen to be obligations that this particular transferee has - and we would submit they are not much at all - then one would say that they could be the purchaser because in the end they were the person who obtained the transfer.
GLEESON CJ: Is the scheme of the current revenue law quite different from the old one?
MR DORNEY: Yes, your Honour.
GLEESON CJ: Does it follow the New South Wales and Victorian approach to this problem?
MR DORNEY: Loosely, your Honour, but it really is quite different. It does not instruct at all.
GLEESON CJ: So what we decide in this case has no implications for that?
MR DORNEY: Absolutely none.
GLEESON CJ: Right.
GUMMOW J: There is supposed to be uniform stamp duty legislation. That has collapsed, has it?
MR DORNEY: It has collapsed, your Honour. Yes, several States have gone very much their own way, including Queensland. Before I move on, in answer to your Honour Justice Callinan's question, my learned junior has ascertained that, so far as he can find, "transferee" as defined in section 49 is referred to in section 51D, where there is reference to improvements by a transferee, and 54(6B), if one goes to see that in the subsection we are looking at, the one immediately following (6A), states:
The commissioner shall not be satisfied for the purposes of subsection (6A) solely on the basis of a document which purports to be an authority given to the purchaser by the transferee in writing -
So there is a reference there.
CALLINAN J: Thank you, Mr Dorney.
MR DORNEY: Your Honour, we do not intend to take your Honours through the particular cases we mentioned in any detail. They are set out in our outline of submissions. Briefly with respect to Pendal Nominees, our submission there is that while it is not any binding authority and while the statement is, in fact, probably obiter, it still is an indication by the Court, in circumstances, we submit, that are almost identical to the present circumstances, that the person in the position of Cromwell is seen to be the purchaser. In Pendal Nominees, its only role in that was to, in fact, accept the transfer. If you look at the obligations cast on the transferee in this case, they are really in no way greater than that which was in Pendal Nominees.
The other passage that was not referred to when our learned friend took you through Pendal Nominees [1989] HCA 19; 167 CLR 1 was a passage in Justice Brennan's judgment at page 19 point 2. I will just briefly go to that. It deals with the issue of arbitrary conclusion and at point 2 on page 19 - - -
KIRBY J: Point 2 on 19 is Chief Justice Mason.
MR DORNEY: I am sorry, your Honour. It is Chief Justice Mason's judgment, your Honour. I merely picked up the reference of Justice Brennan at the bottom of that page quite wrongly. It is Chief Justice Mason:
The result is that the respondents are liable for ad valorem duty upon the sale deed as a declaration of trust, pursuant to paragraph (2)(a). While this may appear to some an arbitrary conclusion, given that a minor reorganization of the transaction or documentation -
that again could have occurred in this case -
may have produced a different result, the legislature has clearly created a wide ad valorem charging provision and some relatively narrow exceptions. In these circumstances, to extend the application of those exceptions on the basis of a supposed legislative policy against the imposition of double duty would not only undermine section 17(1), but would do considerable violence to the language employed -
in other parts. Our submission with respect to that is that if one takes the meaning of "purchaser" in section 54(6) as wide as our learned friends suggest, then you are really doing violence to the language of the legislature as it put it in with respect to contracts of sale and this, in turn, gets us back to the conditional contracts under subsection (1).
We would submit that they are not relevant for present purposes, because we are concerned here with a contract of sale. Therefore, when one looks at subsection (6), in this context, one is only looking at the interpretation of the word "purchaser" in that context and we would submit that to read it wider, given the legislative history and the generally accepted meaning of what a purchaser is in terms of its obligations, that, in fact, one would be opening up for some avoidance.
HAYNE J: Why is this not a contract whereby a person, namely the appellant, becomes entitled to the conveyance or transfer of property?
MR DORNEY: Your Honour, it may well be but it is also a contract of sale.
HAYNE J: Assume it to be both. If it is both, why does (6) not apply?
MR DORNEY: Because if it is both, then subsection (6) will still pick it up in what we submit is the understood meaning of "purchaser". The reference we make, of course, to Lake Victoria is only to illustrate the problems that could occur here if an interpretation is given to subsection (6) that essentially reads "in conformity with the contract". I have already addressed on that, so I will not take your Honours to it any further.
I briefly refer to Fry, A Treatise on the Specific Performance of Contracts. Your Honours, that is attached to our list of authorities. It is on - and unfortunately this is not named but it is Annexure "B" which follows upon a reference to the Acts Interpretation Act. We have extracted from the beginning of Chapter V - the two pages that we take your Honours to are 638 and 639, beginning at paragraph 1393:
It is, then, important to inquire what are the mutual obligations of the parties -
goes to what the vendor is bound to do. 1395 then refers to the view that at least at that stage the:
constructive trustee, or a trustee sub modo -
1396, we would submit, is the important passage in question here. We submit that 1(a) and 2 and the conditions we have already taken your Honours to is applicable and 1(b) is the kind of provision that even in a contract that does not have a nominated transferee, the purchaser does not have to take possession itself of the property, that merely has the right to do it, or has the right to direct it to other persons.
Your Honours, that only leaves one point and that is subsection (6A). Subsection (6A), it must be admitted, is worded somewhat curiously but it does refer in the second line of subsection (6A):
to a person other than the person named as purchaser -
It does not say "the purchaser named in the contract" or it does not say "a party to the contract" or it does not even say "in conformity with the contract". It actually says, "the person named as purchaser". We would submit therefore it was done with an intent and we would submit that if your Honours are otherwise against us with respect to subsection (6) such that subsection (6A) comes into operation, that there still is a hurdle for the appellant to overcome because whatever else, we would submit, it is not named as purchaser. It certainly is named in the contract and certainly if the decision is reached by this Court that subsection (6) includes such a person, it will be named in it and it will be a purchaser but those are not the words that are used.
KIRBY J: Is this not a notice of contention point?
MR DORNEY: No, your Honour.
KIRBY J: This is not a point that the Court of Appeal decided in your favour on?
MR DORNEY: Your Honour, it is a point that was directly raised by our learned friends in having to overcome it. The ground of appeal referred to, subsection (6A), we would submit it is a response to their argument that (6A) applies for their benefit.
KIRBY J: I realise how you are putting it. I am just asking whether in the event that you succeeded on this argument it is something which the Court of Appeal has not decided.
MR DORNEY: It is certainly something that the Court of Appeal has not decided, your Honour, but we would submit that if your Honours came to the conclusion that this did apply then there is no reason - - -
KIRBY J: You say it is merely an argument for the understanding of (6)?
MR DORNEY: It is, your Honour. In fact, in the outline of submissions our learned friends state at paragraph 39 that:
Once it is found that the Appellant was the purchaser within subsec 54(6), as it was named in the Agreement for Sale subsec 54(6A) does not apply to deny the exemption from duty.
We would merely submit that that submission is wrong and that, in fact, subsection (6A) does has the effect of precluding them from the exclusion that would otherwise apply.
CALLINAN J: I do not know. What does the ground of appeal mean? Does it mean that - it is at 162 - that because it is not within subsection (6A) it was within subsection (6)? I know it is not your ground of appeal, Mr Dorney, but how do you read it?
MR DORNEY: We interpret it on the basis that they were directly raising for argument the interpretation of that and the interpretation of it would have availed them to the exclusion. They seem to have addressed it as the primary issue by saying if you do not come within that then you go back to section 54(6).
CALLINAN J: They do not make any submission that they are within subsection (6A) here, do they?
MR DORNEY: No, your Honour, other than to address the arguments as we have addressed them and that if one comes through subsection (6) and gets the exclusion, then it is necessary to look at (6A) because it does cut down on the width of what (6) is. Unless your Honours have any other particular questions, those are our submissions.
GLEESON CJ: Thank you, Mr Dorney. Yes, Mr Russell.
MR RUSSELL: Just three points briefly, if the Court pleases. Our learned friends submitted at the beginning of their submissions that clause 31 of the contract ought to have been struck out. The second question, my learned friends said that the existence of the requirement for proper instructions before the appellant could act meant that there was no effective way in which it had any discretion in the matter. There was in fact a covenant to provide proper instructions. That is contained in clause 11.5 of the contract at appeal book page 58 and there is a covenant in clause 11.4 on the part of the custodian:
to do all things required . . . to enable the Purchaser to observe and perform the obligations -
So there is a separate and independent obligation there.
The final question which we wish to address was one which your Honour the Chief Justice asked of our learned friends which was whether item 23 of the first schedule heading "CONVEYANCE OR TRANSFER" would have any work to do if the construction for which we have contended were correct. In our respectful submission, plainly it would. If, for the purposes of the argument, the appellant had not been a party to this contract, then it might well not have been entitled to the exemption under 54(6) but it would, in our respectful submission, be entitled to the new exemption in item 23 because the exemption becomes available if there is:
A conveyance or transfer of property from a person as vendor to another person as primary custodian for the responsible entity of a registered scheme.
There is no requirement there that the responsible entity be a party to the contract, as was the case here and unless the custodian is a party to the contract, the custodian is not liable to pay the stamp duty. In addition it is at least arguable that paragraph 23(2)(a) which cuts down the availability of the exemption contained by item 23 is available only to a conveyance or transfer:
made under a contract or agreement for sale or transfer of the property entered into between the person as vendor and the responsible entity as purchaser -
that may well require that they be the only parties to the contract. So, on that view, the appellant would not have been entitled to the exemption. But, plainly, there is, in our respectful submission, work to be done by item 23 even if the contention we put before the Court is correct.
GLEESON CJ: So the legislature when it came to address this problem did not do it by amending section 54(6). It did it by inserting a special provision relating to registered schemes which, if it had been in force at the relevant time, would have covered your client.
MR RUSSELL: Subject only to the argument about paragraph (2)(a).
GLEESON CJ: Right.
MR RUSSELL: But it will also operate in circumstances where, if our argument is correct, the conveyance would not be exempt because it will cover situations where the intended conveyee is not a party to the contract.
GLEESON CJ: Yes.
KIRBY J: Did you want to say anything about (6A)?
MR RUSSELL: Your Honour, we have taken your Honours through the legislative history, that it was not intended to affect the position in relation to subsection (6), in our respectful submission. As is perfectly clear, it was intended as an evidentiary provision to stop abuse of sub-sale arrangements and we have taken your Honour to both the explanatory memorandum for the 1988 amendments and to the second reading speech for the 1979 amendments. So if it has the effect for which our learned friends contend, then on the face of the materials before the Court, that was unintended. But, in addition, we would say the test that is required in order to not be taken out of subsection (6) by subsection (6A) is simply that one be - the subsection will apply only if the conveyance is:
made to a person other than the person named as purchaser in the contract or agreement for sale to which the conveyance or transfer is intended -
It is fundamental to stamp duty law, and we have given your Honour the references to Limmer Asphalte. Limmer Asphalte was in fact approved by this Court, but on its second proposition in Pendal Nominees, that one does not change the stamp duty liability of an instrument, or we would say a party, by misdescription. So if one has entered into an agreement which is not a lease and one puts the title "lease" at the top of it, one does not come within the provisions for exigibility on the basis of the lease and we would say it follows from that that if one is not in fact a purchaser in a contract but describes one's self as a purchaser, one is not for the purposes of the application of the provision.
So, in our respectful submission, named as purchaser asks what the person is doing in the contract as a matter of legal reality, not the question how the party has been described in the instrument. If our earlier contention in relation to subsection (6) is correct - and of course we only get to subsection (6A) if your Honours are with us on subsection (6) - if our earlier submission in relation to subsection (6) is correct, then we have been found to be the purchaser for the purposes of section 54(6). We are plainly named in the contract and our role is defined and, in our respectful submission, that would make us the person named as purchaser for the purposes of subsection (6A). That accords explicitly with the identified legislative intent, which is to deal with the problem of people who do not appear in the contract, but who subsequently turn up saying they are entitled to the exemption.
GUMMOW J: Now, Mr Russell, I think the crucial question in the stated case is probably (f), is it not? Can you just look at 163 of the appeal book, plus page 11.
MR RUSSELL: Yes.
GUMMOW J: You want an answer "No", that is to say, the assessment of the Commissioner in the sum of 653,000 is incorrect.
MR RUSSELL: That is correct, your Honour.
GUMMOW J: Then it is asked, "what duty, if any, is payable?" And you say, "Nil". There was some discussion about nominal duty this morning, was there not?
MR RUSSELL: Technically, what one is entitled to - - -
GUMMOW J: You mentioned some set-off too.
MR RUSSELL: Yes. The mechanism, your Honour, is set out in section 54(6) itself.
GUMMOW J: I just think "Nil" might be a bit elliptical.
MR RUSSELL: Yes. The entitlement:
Where duty has been duly paid in conformity with the foregoing provisions, the conveyance or transfer or conveyances or transfers made to the purchaser shall upon production of the contract or agreement or contracts or agreements, duly stamped -
and it is common ground that those things have happened -
not be chargeable with any duty, and the commissioner, upon application, either shall denote the payment of the ad valorem duty upon the conveyance or transfer or conveyances or transfers, or shall transfer the ad valorem duty thereto.
So, in a sense, the second part of that would suggest that there is a liability to duty but you can transfer it across from the contract and thereby satisfy the liability. But the earlier words say that the conveyance shall "not be chargeable with any duty".
GUMMOW J: Well, the proper answer would just be that 54(6) takes effect according to its terms, would it not?
MR RUSSELL: Yes.
GUMMOW J: But you have to give a speaking answer in that way, rather than fix upon a sum.
MR RUSSELL: That is correct, your Honour.
GLEESON CJ: Thank you. We will reserve our decision in this matter and we will adjourn until 10.15 tomorrow morning.
AT 3.26 PM THE MATTER WAS ADJOURNED
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