Australian Airlines Limited v Commissioner of Stamp Duties for the State of Queensland

[1988] HCATrans 132

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No BS0 of 1987

B e t w e e n -

AUSTRALIAN AIRLINES LIMITED

Appellant

and

COMMISSIONER OF STAMP DUTIES

FOR THE STATE OF QUEENSLAND

Respondent

MASON CJ
BRENNAN J
DEANE J
DAWSON J

GAUDRON J

Airlines

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON TUESDAY, 28 JUNE 1988, AT 10.04 AM

(Continued from 27/6/88)

Copyright in the High Court of Australia

BlT2/l/PLC 8 28/6/88

MASON CJ: Yes, Mr Gzell. Well, section 37 of the AUSTRALIAN

NATIONAL AIRLINES ACT is the answer to your problem,

is it?

MR GZELL: Quite, Your Honour.

MASON CJ: Well, the answer to the problem we put to you?

MR GZELL: Quite, Your Honour.

MASON CJ:	Now, the Court will stand over its decision on the application to revoke the grant of special leave until
it has heard the argument in support and in response
to the appeal. So, you may as well proceed with the
substance of your argument, Mr Gzell.
MR GZELL:	Might I hand to Your Honours an outline of our

submissions?

MASON CJ: Yes.

MR GZELL:  If the Court pleases, might I take the Court to the

original contract with which we are concerned which

appears at page 11 of - - -

MASON CJ: Before you take us to the contract, would it be

convenient for you to hand up copies of the Queensland

Act at this stage so that we have that in front of us?

MR GZELL:  Yes, it would. Our learned friends have copies

which they have now given to me and I might hand them

to Your Honours.

If I could take Your Honours then to section 54 which is the provision with which we are concerned.

Subsection (1) brings to duty:

(1) Any contract or agreement -

for sale that does not fall within specified exceptions

and we would not suggest that this agreement for sale

fell within any of the exceptions and in consequence,

from the moment of its execution, it was exigible under

subsection (1). The framework of the legislation, in our

submission, which I will develop a little later, based

upon the origin of the provision in England contained

two safeguards against double duty in the circumstance

that what was to be taxed was the agreement and not the

conveyance.

The two safeguards were first that a conveyance in

conformity with the agreement would be exempt from duty

and that is provided in subsection (6) of the Queensland

Act, and the second safeguard was that if the agreement

for sale was discharged by rescission or was annulled - ' . . d 1 .

or, .:.:c::,.,,~s .. :n·,,2 0d1 . .:.~; .:;.sa:::.uu, was not carrie to comp 9tion

by way of a conveyance, there was to be a refund of the
duty or, if it had not already been paid, there was to be

no claim by the Commissioner for it. That was the

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legislative framework. The provision is now contained

in subsection (7) and it reads:

Ad valorem duty with which a contract or

agreement would otherwise be chargeable

shall not be claimed in any case where there

is produced to the Commissioner evidence

satisfactory to him that such contract or

agreement was rescinded within 30 days after

its execution.

If ad valorem duty has been paid on a

contract or agreement which is at any time

afterwards rescinded such duty shall be

refunded to the person entitled thereto if -

certain things are produced to the Commissioner. And the

application for refund is made within a specified

time. I will return to that a little later.

If I could take Your Honours to page 11 of the

appeal book; it is the original contract set out at

that page with which we are concerned. The other

instruments associated with the transaction were all duly
stamped and there is no case in respect of any of the
other instruments. It is only in respect of the first

instrument that the appeal arises. And our primary submission is that if one looks at that instrument, whether one looks at the substance of the transaction

or whether one looks merely at the words in which the

instrument is couched, on either basis, it is clear

that the leading or principal object of that original

contract was an agreement for sale of land. It had,

coupled with it, an agreement for lease back to the

vendor of portion of the building but as will appear

the Commissioner did not stamp the instrument upon that

basis.

Clauses 1 and 2 of the instrument are formal.

Clause 3 is the provision providing for the sale and

purchase of the property. Clause 4 provides for the

consideration for sale of the property. Clause 5

provides that the vendor will execute the conveyance.	Clause 6 provides that the vendor shall pay outgoings
and receive rent up until the date of possession.
Clause 7 provides that the land is sold subject to the reservations in the title deed. Clause 8 provides for delivery of objections or requisitions on title.
Clause 9 provides the production of certain
documents shall be at the expense of the purchaser.
Clause 10 provides that the risk lies with the vendor until the date of possession. Clause 11
provides that there are no warranties by the vendor
as to encroachments. Clause 12, similarly, no
warranties as to the state or condition of the land or
improvements. Clause i3: that the purchaser is i:o
comply with requirements of statutory authorities.
Clause 14: the purchaser to pay interest if there be
default in payment. Clause 15: the vendor's options
on default. Clause 16: time is of the essence.

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Clause 17: costs other than stamp duty to be borne

by both parties. Stamp duty on the agreement, by the

purchaser, any stamp duty on the agreement for lease,

by the vendor. Clause 18: the purchaser is not

obliged to pay unless there be a conveyance. Clause 19:

a reservation of certain articles from the sale.

Clause 20: that the agreement for sale is subject to

current tenancies. Clause 21 provides an agreement

for lease back of portion of the premises. And if I
can take Your Honours to page 23 of the record, that is
a schedule to the agreement containing the form of the
lease to be granted contemporaneously and that lease was

for portion of the premises for a period of five years.

Clause 22: that the vendor should carry out certain

renovation works prior to the date of completion.	And
then came clause 23: that clause which entitled the

purchaser to nominate a substitute purchaser in which

event the vendor would rescind and enter into a new
contract with the purchaser and the purchaser would

indenmify in respect of any~amp duty. And clause 24

providing for the apportionment of the sale price.

So that when one looks at the document itself

its primary object is that of an agreement for sale of

land. Clause 23, in our submission, did not alter that

position at all because it was merely an offer to

substitute another purchaser. It was not a further

agreement for sale.

Their Honours below appear to have approached the matter on the basis that if the mechanism in clause 23

were activated the conveyance would be made to the

substituted purchaser and therefore the agreement provided

alternative modes of performance, the second of which

was followed. And I should take Your Honours to the

passages in the judgment of Their Honours below, Firstly

Mr Justice Thomas at page 179 of the appeal book at

the top of that page:

The original contract provided two alternative methods of performance. The first was by sale to

the first purchaser and the second by the

mechanisms which would lead to a contract with

another purchaser. Plainly the second alternative

was carried out.

And then His Honour goes on:

it is not necessarily a full answer to the

appellant's submissions to hold that the

first contract has been performed, if it has

also been rescinded. There is no issue in

relation to the time of the alleged rescission,

so the specific question arising under s. 54(7)

is simply whe_tl:'!er th~t co~tr§lct was resci.nded.

UH iL8 ia.CE:: trie' iescissiori.' agreement of

11th February was a rescission of the original

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agreement, and the Commissioner's only answer

to this is that it is a misnomer, and that
the whole exercise was an artificial device.

Although using the term "artificial device"

counsel did not refer to s. 81 of the STAMP

ACT which voids as against the Commissioner

certain agreements or arrangements for altering

the incidence of duty, and I did not understand

him to seek a finding under that Section.

Rather I understood his submission to be that

the Court should look at the substance of the

whole transaction (in line with the decisions -

which His Honour then cites -

and determine that no rescission has occurred.

Counsel for the appellant submitted that a

novation should be inferred from the conduct

of the three relevant parties. However the

evidence fails to disclose any relevant occasion

when the parties or their representatives

expressed their agreement that the new contract

replaced the old, and that the old contract

was to be taken as discharged; and whilst the
documents indicate that the original contract was

discharged and a new contract created I do not

think it should be inferred that this occurred

as the result of a novation. Indeed the natural
inference from the parties' conduct is that there
was no novation, the parties acting at all

times pursuant to their rights and obligations

under cl. 23 of the original contract.

And then at page 181, in His Honour's judgment, in the

second complete paragraph on that page:

Where then does the present case stand?

It is true that the original contract has now entirely gone, and that the parties have not

only "rescinded" it, they have granted full

releases so that there is nothing left to enforce.

But it is equally true that that contract has

been fully performed. Indeed there have been

two transactions, each based on a contract for the

sale of property. Both have been fully performed

even though there has eventuated a sale of the

property to only one purchaser. Each document is

liable to ad valorem duty unless there has in

substance been a rescission of the first.	In my
view, insofar as the first contract was the vehicle by which the eventual transfer was

effected, it was not rescinded. In substance

there has been no rescission of anything other than

;:in Pmpt:v she] 1 , I.n the end :the conclusion I cj.:.raw

from the circumstances is that the parties at all

times acted pursuant to the original contract

which has now been discharged by performance, not

by rescission.

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And in the judgment of His Honour Mr Justice de Jersey,

at page 185, the second full paragraph on that page:

On the other hand, Counsel for the

respondent submitted that that original

contract was performed. It was, he submitted,

capable of being performed either by a

transfer to Tealmont, or by the appellant's

entering into a contract of sale with a nominee

ofTealmont. The latter course, contemplated

by clause 23, was followed. The contract

having thereby been performed, it could not be

said to have been rescinded, notwithstanding

the so-called deed of rescission of

11th February, 1985. I agree, essentially,

with these latter submissions.

In our respectful submission, there are two problems

associated with Their Honours' reasoning: first, the
original agreement did not offer alternative modes of

performance. It contained an agreement for sale to

Tealmont and an offer to rescind that agreement and

replace it with an agreement for sale to a nominee of

Tealmont and unless and until that offer was accepted there was no alternative mode of performance, and if

that offer was accepted the consequence was that the

original agreement for sale came to an end. Secondly,

even if the overall transaction be looked upon as

Their Honours did as an agreement for sale to Tealmont
or an agreement for sale to Tealmont's nominee,

the performance of the alternative mode necessarily

involved rescission of the inconsistent other mode.

The two modes being inconsistent, a choice of one must

spell the death of the other.

DAWSON J: I am not sure that I understand that, Mr Gzell. If

you have a contract to X or his nominee and X nominates

someone, do you say there are two contracts to begin with?

MR GZELL:  No. Your Honour, I am saying it in the context

of this contract which said: there is a contract of

sale to X and an offer to rescind that contract of sale

to X upon the production of Y who is prepared to enter

into a similar contract on identical terms.

DAWSON J: What is the difference between that and a contract to

X, to sell the property to X or his nominee?

MR GZELL:  Because, Your Honour, the exigibility to duty lies

in the agreement for sale. It is only the agreement for

sale which is exigible. In the circumstance that

Your Honour puts to me of an agreement to sell to X or

nominee, that document is exigible to duty. To protect

against double duty in the event of an attempt to offer a

conveyance	.. t_o _thi=> •. nomjnpp r;::ithPr r:h?.1'.l to= 1 tr-0 "!'.'"" ;:ir.e
stringent requirements within the legislation.	So that

the legislation would say you do not get the advantage of
the exemption of the conveyance in a nominee contract

unless you can prove that the nominee has been nominated

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in writing before the contract of sale was entered into.

If that be not the case then your conveyance is not

exempt. In our situation, we had an agreement for sale.

The agreement for sale provided for its rescission and

substitution by another agreement for sale equally

exigible to duty. Once that other agreement for sale

came into existence, it was stampable and in this case

it was stamped and duty paid. What the legislation

says is that if the first agreement for sale is rescinded

you can have your duty back.

DAWSON J: Well, that describes the consequences but my question

was what is the difference in substance between this

contract and a contract to sell to X or his nominee?

MR GZELL:  The only difference, Your Honour, is the inclusion

of a clause providing that the contract may be rescinded.

BRENNAN J: Well, there is another, is there not, and that is

that the promise ofl.the price in the case of X or his

nominee is always a burden resting on X? Here, once

you have got your substituted contract, the burden rests

on the new purchaser.

MR GZELL: Quite, Your Honour, but so far as the exigibility to

duty is concerned, each contract is subject to duty as an

agreement for sale. What Your Honours are concerned with

in this case is whether or not that original agreement for

sale was rescinded and what Their Honours appear to have

done was to say it was not rescinded because the contract for sale contained a provision leading to its rescission,

and if that provision were followed there was performance

of the contract. We say that that cannot be so, that

if the procedure for rescission were followed there could
not be performance of the agreement for sale
notwithstanding that there was performance of one
provision within the instrument; .. that once the power

under clause 23 was called in aid and the substitute

contract entered into it must necessarily have followed

that there was rescission of the first contract for sale.

The two were inconsistent, the one with the other, the

two could not sensibly stand together. The execution of

the second must have had the consequence that the first

was rescinded.

Now, the legislation will grapple with the consequence

of subsales in different ways. Section 53(4) deals

with the notion of a subsale and in the circumstances to
which it applies brings to duty both the original agreement

and the substantive agreement, but that was not the basis

upon which the Connnissioner sought to approach this

matter. The Connnissioner simply asserted that he was not

satisfied that the original contract in this case was

rescinded; a very narrow point, a confined point, and

Their Bnnours hP.J0w confineg themselves to looking at the

problem on that basis. And Their honours below took the

view that because of the inclusion of clause 23 and because

the parties acted in accordance with it, that that meant

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there had been performance of the original contract for

sale and there was no rescission and we say that cannot

be so because the original rights and obligations which

constituted the contract for sale under that original

instrument were discharged.

BRENNAN J:  Mr Gzell, the interpretation of the words "contract

or agreement" both in section 54(1) and section 54(7),

I take it, is indicative not of the operation of the

document but of the document itself, would that be right?

MR GZELL:  Yes, Your Honour, because it is a duty in respect of

an instrument.

BRENNAN J:	An instrument- well now, then to ascertain the character of the document for the purposes of ad valorem
tax, one looks at its leading object under section 54(1).
One here finds that it is an agreement for sale.
So that that document then is one which is taxable,
ad valorem is a conveyance on sale.  When one comes to
section 54(7) one is not concerned with the leading object
any more, are we?
MR GZELL:	One is concerned with a transaction constituting a

rescission.

BRENNAN J: Of the document as a whole, whatever its leading

object may be?

MR GZELL:  Of the leading object of the document, we would say.

BRENNAN J:  Why? Why do you there translate the leading object

test from section 54(1) to section 54(7)?

MR GZELL:	Because I grapple with this notion, that within the instrument with which we are concerned there was a
performance of clause 23 itself, there was an ongoing
indemnity provided once the mechanism of clause 23
was called in aid, that ongoing indemnity being in
respect of stamp duty. So, it was not a situation
in which the entirety of the instrument is set at nought
and, indeed, there had been a payment of a deposit
under that original contract for sale and there was a
mechanism by which the substituted purchaser and the original purchaser were to direct the vendor that the deposit should stand as a deposit under the substituted
contract. So that it is not sufficient for me to argue
that one can simply look at the instrument when one
comes to subsection (7). It is necessary for me to put
the argument that subsection (7) will relieve from duty
in circumstances in which some of the obligations
under the instrument have been carried into effect
but others of the obligations are discharged. We submit
that provided the principal object of the instrument
which constituted iv a.S aa a.5 .1.~...:u1;;.11;_ .C...,::.. "'..::;.:;_e :.o.s :icen
rescinded, that is sufficient for the operation of subsection (7).
BRENNAN J:	Does that fit well with the second paragraph of

subsection (7), the wording of it?

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MR GZELL: With_ the second paragraph, Your Honour, the paragraph

saying:

If ad valorem duty has been paid?

BRENNAN J:  Yes. I am looking at the words:

which is at any time afterwards rescinded.

It is seeming to be an adjectival clause qualifying II II

contract or agreement .

MR GZELL:  Yes. That contract or agreement, of course,

being a contract or agreement for sale, if one

goes back to subsection (1).

BRENNAN J: Well, for sale inter alia?

MR GZELL:  Yes, for sale inter alia but the gravamen of

exigibility of the instrument is that portion

of it which constitutes an agreement for sale.

The instrument is not exigible to ad valorem conveyance duty unless there be portions of it

which constitute an agreement for sale and, if

the instrument contains other matters which might

be exigible on a different basis, section 54(7)

does not operate in ·respect of it. Section 54 ( 7)

is a relief in respect of that portion of the

instrument which is an agreement for sale.

So that, for example, in this case if the Commissioner

had exacted duty on clause 21, which was the

agreement for the lease, and the agreement had

subsequently been rescinded, we could not have

sought relief from the duty in respect of the

agreement for release under that provision.

Likewise, it does not matter, in our submission,

if the instrument contains peripheral matters

which, if they had stood alone, might be exigible

to duty under another heading in the schedule

if the principal and prime purpose is the only

basis for exigibility.

We have no difficulty, Your Honour, viewed

in that context, of saying that we are entitled

to the benefit of subsection (7) relief notwithstanding
that there are other provisions within the instrument

which were performed.

The other basis upon which we submit that

Their Honours' reasoning was wrong was that -

I had just commenced the submission in respect

of that and I had submitted to Your Honours

that the two modes to which Their Honours referred,

even l'f -o-ne ac-cep-t-:.--1 i·· 11~~-~ ,.: __ ,_ ~f 1 u· 0 , 1·:-':,- s---

e u .._ L t.. .L .... " _ - ,. .~ . ...1.. .._.. • ~ ..... ·b ...... L.

the instrument as containing alternative agreements,

which we submit is wrong, even if one looks at

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it from that point of view, those two alternative

modes being inconsistent, the one with the other, the acceptance of the second, in our submission,

must spell the death of the first.

Their Honours fastened upon the narrow

point that the agreement provided for its own

termination in certain events and that mechanism

having been followed, it was spent and there

was nothing left to rescind. So Their Honours

took the view that the deed of rescission could not operate to rescind anything because nothing

was left. The case reveals that the substitute

agreement was entered into between the appellant
and Permanent Trustee and the case reveals that

the documentation referred to in clause 23 was executed with the exception of the guarantees.

There appears not to have been a request for

the delivery of guarantees.

The case reveals that the other documentation,

including the deed of rescission which is referred

to in clause 2~ was delivered and was executed

and Their Honours appear to have taken the view

that the execution of the deed of rescission

could not have acted as a rescission because

there was nothing left to rescind. That, in

our submissison, ignores the circumstance that

the very act of termination of the original contract

itself constituted a rescission. So that the

very act by the appellant in entering into the

second agreement with Permanent Trustee, with

the concurrence of Tealmont - Tealmont having

requ~st~d that that be done - that very act constituted

resc1ss1on.

There was substituted for the original

contract a new contract. The obligations of

vendor and purchaser under the original contract were discharged and that is rescission. It does

not matter that the original contract provided

for its own rescission; that does not mean that

what occurred did not remain a rescission.

It would be an extraordinary result if an agreement

could be rescinded by a subsequent agreement but could not be rescinded if it contained a

specific provision for its own rescission.

DEANE J:	Was there any provision in the original contract
as to what happened to the deposit under the
clause 23 procedure?
MR GZELL:	Yes, Your Honour.
DEANE J:	Where is that?

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MR GZELL:  The provision was that the - - -

DEANE J:	I know what did happen.	I was just looking for the
clause.

MR GZELL:  Yes. There is an authority in writing. Under

clause 23(d), what was required was:

an authority in writing executed by the
present purchaser and its nominee addressed

to the vendor authorizing -

that the deposit be dealt with. And, indeed,

Your Honour, so far as the agreement between

Tealmont and Permanent Trustee was concerned,

which was duly stamped, that agreement being

an agreement by Tealmont that it would activate

clause 23 for a price. Permanent Trustee paying

a price to Tealmont for Tealmont to activate

clause 23, there was provision that Permanent

Trustee would refund to Tealmont the deposit

which was being appropriated to the new contract.

MASON CJ:  The notion of rescission in subsection (7) extends

to unilateral rescission as well as bilateral

rescission?

MR GZELL:  One would suggest that that would be so,

Your Honour, because there would be no reason

to exclude the benefit of the provision if the

contract were rescinded for whatever reason.

There might be other consequences inter partes

but so far as the revenue is concerned there

ought not to be construed to be any differentiation

between the type of rescission. The section

ought to operate if, for any reason, the contract

were rescinded.

MASON CJ: If that were so, then the purchaser could unilaterally

rescind pursuant to a clause in a contract or,

perhaps alternatively, at common law, provided

that it were within the 30 days, even though

he had received some benefit under the contract

putting an end to the contract for the future.

MR GZELL:  Yes, Your Honour. We would see no problem about

that because if, as a result of any inter party

conflict which required the party unilaterally

rescinding, notwithstanding that action to complete

and specific performance were granted, and a

conveyance then came into existence, the revenue

would obtain duty on the conveyance and it would

still obtain its just deS.ierts and there would

be no loss to the revenue.

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The question of the nature of rescission, whether it should be regarded as rescission ab initio or

rescission in respect of executory rights, was

not argued in the court below. We would submit

that the notion of rescission by agreement does

encompass the situation in which there may have

been part performance of obligations under the

contract provided there be executory obligations

on both sides which the release of both of which

constitute the consideration. That is sufficient

for rescission.

BRENNAN J:	Even after conveyance?
MR GZELL:	Your Honour, if it is after conveyance, one

would expect that there were not executory obligations

constituting an agreement for sale which remained.

BRENNAN J:	Why would that be?
MR GZELL:	Because the agreement for sale concept is perfected

by the conveyance~

BRENNAN J:  It may be that some of the consideration is

still outstanding? In other words, let me put

your proposition to the test. Let us assume

a contract which, for some reason or other, provides

for payment over time of the purchase price with

conveyance taking place early in the piece.

Conveyance takes place; the contract has been

stamped ad valorem; conveyance is not stamped;

conveyance is complete; registration takes place

and the parties then agree to rescind that contract
as to the future. On your argument, would the
parties then be entitled to a refund of the ad

valorem duty?

MR GZELL:  Your Honour, I do not need to go so far as that

in this case. There are conceptual difficulties

if one pushes to the extreme the notion that

rescission by agreement is open if there be any

executory obligation because one can, as Your Honour

has put to me - a proposition in which all but

a very small part of that which in this context

constitutes the agreement for sale has been completed

and the notion then of a rescission creates difficulties.

Suffice it to say for our purposes, Your Honour,

that in this case there was no such dilemma.

In this case the only executed portion of the agreement was the paYlill,ent of the daoosit at".d then activation of the mechanism under section 23.

In further answer to Your Honour Justice Brennan's questions·, iL ruay be that in t·tw.:;c: c:i..rcutri6L,H1\...es

it is appropriate to regard that instrument as

an agreement for sale and an agreement for loan

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and to regard the agreement for sale as having been

completed by the conveyance such that there is

no room for the operation of subsection (7) and

that may be an answer to the proposition that

was put to me.

DEANE J: If you look at the equitable ownership, what

would you say was the position as to equitable

ownership between the putting into operation

of clause 23 and the subsequent execution of

the documents in (a) and (b) by the vendor?

Could I suggest an answer? Would it not be

that the purchaser would at that stage hold the

equitable interest on trust for the new purchaser

which means that the equity never went back

to the vendor?

MR GZELL:  We would not construe clause 23 as creating

that result in the first place. We would construe

clause. 23 as giving rise to that consideration

once it is activated in some way. There may

be a temporal period at which the equitable interest

reverts before the execution of the documents

but in this case we would submit that it does
not matter because the creation of the equitable

interest is followed by the execution of the

documents and there ultimately followed a conveyance.

DEANE J:  Yes, I follow that.

MR GZELL:  Your Honours, we submit that in the stamp duty

context, and I appreciate that I have answered

some of Your Honours' questions in that context,

but the submission that we make is that apart

from a consideration of the matter from the point

of view of contract, when one looks at it in the stamp duty context, the position is even

clearer because duty is relevantly charged on

an instrument, not on a transaction, and if the

obligations under the instrument are discharged

the object of the legislation is to return the

duty.

Might I take Your Honours to THE COMMISSIONERS

OF INLAND REVENUE V ANGUS, (1889) 23 QB 579.

We have prepared, if Your Honours please, a number

of booklets containing the provisions of the

English Act and the Queensland Act with its amendments

which I will hand to Your Honours. ANGUS' case
was decided under section 70 of the English Act

of 1870. That section we have set out for

Your Honours; on the first page of the booklet

section 70 apears. There is no provision deeming

an agreement for sale to be a conveyance on sale.
1ne:re is simply the definition in sc:.;:;tion 70

of the conveyance on sale and it was a conveyance

or transfer on sale which gave rise to the duty

in the schedule to the Act.

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In ANGUS' case it was held that:

an agreement for the sale of the goodwill
of a business, the effect of which in equity,

as between the vendor and the purchaser,

was to make the purchaser the owner, and

of which a Court of Equity would have

decreed the specific performance in the
event of the vendor not fulfilling his
contract, was not within s.7O.

The case was argued before the Queens Bench Division on 3 April 1889 and the judgment went against

the revenue, the judgment being delivered on

8 April 1889. On 31 May of that year section 18( 1)

was introduced into the CUSTOMS AND INLAND REVENUE ACT

and we have given Your Honours a copy of that

section. Section 18(1) read:

Every instrument containing a contract,

whether executed or executory, for the

sale or purchase of any property, save

such as passes by delivery, or must be

conveyed by deed, shall, so far as relates

to stamp duty thereon, be deemed to be

a conveyance on sale of such property;

provided that the ad valorem duty paid

upon any instrument in respect of any executory

contract shall be returned by the Commissioners

of Inland Revenue, if, within twelve months
from the date of the first execution of

the instrument, the executory contract

shall have been rescinded, or shall have

become null and void by reason of any notice

given according to the terms of the instrument,

or the default of any party thereto to

perform any condition precedent specified

in the instrument and declared to be essential

to the completion of the contract.

Following the introduction of that provision

consequence of the decision in ANGUS' case, the	in May 1889 and, we would submit, clearly in
appeal was argued and judgment delivered on
29 July of that year. Following the judgment
in the Court of Appeal on 26 August, the CUSTOMS
AND INLAND REVENUE ACT was amended by the REVENUE ACT
and we have set out the provision of the REVENUE ACT
of 1889 which substituted the section with another
section.

I will not read it to Your Honours~ suffice

it to say that what the new provision did was

to delineate with a little more sophistication

the ear1ier exemptions fur a title passing on deiiv-:::Ly

or by deed. It contained an acknowledgement

of territorial 1 imitations and it provided protect ion

to the revenue against subsales.

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But the primary concept that if the agreement for

sale was rescinded - reminded - that primary concept

being that in that event there ought to be a

refund of duty.

Again we have set out in the booklet, but

I will not take Your Honours to it, the consolidation which then occurred in the 1891 STAMP ACT in

England suffice it to say that the provision

of section 59 was based upon section 15 of the

earlier Act with some textural changes.

In our submission, the legislative intention

was clear enough and that was that an agreement

for sale was to be stamped as if it were the

conveyance but subject to measures to protect

the revenue against loss on subsales. In order

to avoid double duty a conveyance in conformity

was exempt and duty should be refunded if the

agreement was rescinded. That structure appears
in the original Act in Queensland in 1894 and

none of the subsequent amendments, in our respectful

submission,alter the basis of legislative intention

to be gleaned from the terms of the statute which

we have submitted to Your Honours - and I will

not take Your Honours to each of those provisions.

In our submission, whereas here the original

obligations constituting the first agreement

for sale were discharged, that discharge affected

a rescission within the meaning of 54(7) and

the duty ought not to have been claimed.

Your Honours, we have been given notice

that our friends intend to rely upon section 81

of the Act. Section 81 is an anti-avoidance - - -

BRENNAN J: Before you come to that, Mr Gzell, can I just ask

you one further question. With reference to

the operation of the release or the rescission,

which appears at page 162, is that correct, of

the appeal book?

MR GZELL:  Yes, exhibit F, yes, Your Honour.

BRENNAN J:  That is the relevant instrument. By clause 2

of that document:

The parties -

are released from -

performance of the contract and from all

obligations -

et cetera. So that there one has an absolute

re5Cission in futuro of all executory obligations.

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Now, if one puts that to work in the context of clause 23 of the original agreement, would it

be right to say that the rescission comes into

effect only after the obligations on the part

of the vendor under clause 23 are fulfilled?

MR GZELL:  It must, Your Honour, in our submission.

BRENNAN J: If that be so then is it not the fact that

the release takes place after the vendor has,
pursuant to the original agreement, entered into

the contract of a new sale?

MR GZELL:	Yes.
BRENNAN J:	And thus the release is for the purpose of

terminating whatever residual obligations there

may have been in the vendor?

MR GZELL:  Yes.

BRENNAN J: Is that not more consistent with a discharge

of the original obligations of the vendor by

performance than by rescission?

MR GZELL:  No, Your Honour, because the submission that

we have made is that the very act of operating

under the earlier provisions of 23, in entering

into the substitute contract effected the rescission.

Th.at: Their Honours' analysis of the effect of

the deed itself is accurate in the sense that
by the time the deed itself is executed, as distinct

from being delivered as part of the framework

for the operation of 23, there is nothing left

to rescind and it is presumably introduced in

an evidentiary sense to establish that what has

gone before is a rescission but that by the time

that document is executed there is nothing left

to rescind does not alter the proposition that
the transaction entered into, of which this was

but part, constituted rescission. (Continued on page 24)

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MR GZELL (continuing):  The rescission can be

constituted by conduct; the very entry into the

substituted agreement with the consent of the

purchaser under the original agreement must have

effected a novation which requires that the original

agreement was rescinded.	So that we do not rely
upon the document itself.	We rely upon the

transaction which was entered into in accordance

with clause 23 as effecting the rescission.

DAWSON J:	What you are saying is that the rescission and
the performance of the contract are contemporaneoushere
because the performance is rescission. It is riot against you?

MR GZELL: It is a bit difficult, Your Honour, to think in

terms of non-performance being performance and

if one thinks in terms of rescission discharging

performance it is a little difficult conceptually

to regard a discharge or non-performance as being

a performance.

DAWSON J: I do not see why. If you can mutually agree to

rescind then you can perform that agreement by

rescinding.

MR GZELL:  You can perform that provision within the agreement;

the effect of performing that provision within the agreement is to effect a rescission of the

other parts thereof and we put it on that basis,

Your Honour.

If I could turn, Your Honours, to the notice that we have been given that our learned friends

intend to rely upon section 81 which is the - - -

MASON CJ:  Do you need to deal with this in-chief, it is rather

a matter for you to reply to, is it not?

MR GZELL: Well, the only portion that I wish to deal with

now, Your Honour, is our objection to it being

raised before Your Honours - - -

MASON CJ:	Yes.
MR GZELL:	- - - and not an argument in relation to it -

simply the objection to it being raised, and we

object to it being raised because it was not raised

in the court below and I have read to Your Honours

the passage from Mr Justice Thomas in which that

is mentioned. There are no ultimate findings in

t.;,c:.; .,..ac.,(; ,.,:.~._;, , .. , .. <~~ SUiJpo-;:t the operation of the

section. If the matter had been raised by the

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Commissioner at the time he was drawing his case

the appellant would have had the opportunity to ask for further findings to be stated grounding the operation of the section and if the Commissioner

had refused to do that the appellant would have

had the opportunity to seek mandamus from the

Full Court.

The Queensland Act does not allow, as do some

of the Acts of other States, the court to order
the Commissioner to amend his case but, in our
submission, it would have been open to the appellant,

if the Commissioner had refused to state ultimate

facts leading to the operation of section 81, to

request the Full Court to order him to do so.

MASON CJ:· Is the form of the stated case appropriate to

ventilate this question?

MR GZELL:  We would have submitted not, Your Honour, because

the form of the stated case not only contains no

ultimate statement of facts to support it but contains

in paragraph 13 a statement of fact which, we would submit, limits the Commissioner to the narrow issue

which we have argued. Clause 13 says:

In arriving at his assessment of duty payable

upon the Contract and Deed of Rescission,

the Commissioner considered that the Contract

has not been rescinded within the meaning

of Section 54(7) of the STAMP ACT.

No other basis is stated in the case an~ it being

a statement of ultimate facts from which no inferences

may be drawn, it is inappropriate, in our submission,

that the matter be now raised - inappropriate because

the case does not allow for it and inappropriate
in the sense that the appellant has been deprived

of the opportunity of having proper facts stated

which would have allowed the argument to be agitated.

Those are our submissions, if the Court pleases.

MASON CJ:  Yes, Mr Gzell. Mr Hanson.

MR HANSON:  Could I hand up an outline of our submissions,

Your Honour?

MASON CJ:	Thank you.
MR HANSON:	There is a suppleITTentary list of cases with the

outlines, Your Honours.

MASON CJ: This list of references is of little value to

us. By and large that is for the guidauce of cho::,e

assisting us who can provide~ in advance, the

authorities.

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MR HANSON:	Yes.	I hand that up because we will possibly

make references to cases and the citations are

there.

Your Honours, our first point, and the one

that found favour with the Full Court as you have

already heard, is that the agreement between the
original vendor and the original purchaser was

performed rather than rescinded. It is our submission

that the agreemen~ looked at as a whole, is an

agreement to sell to A or A's nominee and looking

at it from the vendor's point of view it was, and

always remained, an agreement for the sale of
land, the only change being in the identity of

the purchaser and that object was to be achieved

either by selling to the original purchaser and

conveying - I should not say "selling" - by
conveying to the original purchaser or, alternatively,

achieving the same result with a nominee by interposing

a further document, a contract of sale, rather

than simply a conveyance to the neminee.

Your Honours, the obligations of the vendor

under that contract have been performed in full
and the vendor has been held to each of those

obligations. The rights of the purchaser have

been exercised and may we demonstrate those points
by asking Your Honours to look at clause 23, and

it is more conveniently set out at page 3 of the

appeal book, in the stated case. And it is our submission that each of the steps contemplated

by clause 23 was followed other than subparagraph (c).

The clause commences:

The purchaser shall at any time prior

to the date of possession be entitled to nominate

another purchaser of the said property by

notice in writing to the vendor -

that occurred and the document nominating the substitute

purchaser is at page 166 of the record. Without

a notice given pursuant to the provisions of clause 23.	taking Your Honours to it it recites that it is
The clause goes on:

PROVIDED THAT such notice is accompanied by:-

(a) an agreement to rescind this contract

duly executed by the purchaser -

that document appears at page 162 of the records.

(b) a contract on the same terms as this

contract ..... duly executed by the nominee -

that document appears at page 127 of the records.

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(c) _a guarantee ..... as the vendor may reasonably

require -

no evidence of such a guarantee - apparently not

required.

(d) an authority in writing exeucted by the

present purchaser and its nominee .....

authorizing the vendor to apply and utilize

deposit moneys -

the two documents appear at 158 and 160.

So, in our submission, everything contemplated

by 23, other than the calling of the guarantee,

was carried into effect.

DAWSON J:	Why can you not perform an agreement by rescinding
it or rescind an agreement by performing it, whichever
way you want to put it?
MR HANSON:	Well, you can, Your Honour.

DAWSON J: If that was what was done here, why was there

not a rescission?

MR HANSON:  Well, we say that was not done here because the

vendor began and remained always obliged to sell

to some person or other and was never released

from that obligation and what was done was done

pursuant to that contractual promise on the part

of the vendor. The purchaser called upon the vendor

to perform its promise and the vendor performed

and remained always bound to sell to one or the

other.

DAWSON J:  But he was not bound to sell after the steps in

clause 23 were carried out.

MR HANSON:  Was not bound to convey to the original purchaser but was bound to sell to the substitute purchaser

as contemplated by clause 23. We say it is a question

of characterizing the contract as a contract to

sell to A or the substitute purchaser.

DAWSON J:  What worries me is something which was said.

What if there had been no clause 23 but the vendor

and purchaser had, quite outside the agreement,

got together and agreed that the steps in clause 23

should take place? Would you say there is a

rescission then?

MR HANSON: Including the provision of a new purchaser,

Your Honour - the third party being brought in?

DAWSON J: If you like, yes.

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MR HANSON:	That would probably be called a novation.	Yes,

and it would be a rescission - a rescission by

novation if it occurred after the contractual

arrangements had been rescinded.

DAWSON J: It is a very odd result that you would put something

in the agreement and it means one thing; if you

put it separately from the agreement it means another,

is it not?

MR HANSON:  True, Your Honour, there are some curious features

of the whole transaction - true, but because it

is there and because the vendor was always held

to it the situation is, in terms of contractual

obligations, different from the situation

Your Honour put to me. The vendor may never have

agreed to a subsequent novation; he may have held

the purchaser to the original agreement whereas

here he has promised to do so and when called upon

performed that promise. It is the character of

the document we rely upon. It remained always

an agreement to sell to A or Band the vendor was

never released from that obligation.

MASON CJ:  I do not quite understand the foundation on which

you put it at the moment, Mr Hanson. Are you saying

that because it has that flavour, because the

agreement for rescission is within that contextual

framework it is not relevantly a rescission within

the meaning of"rescind"in subsection (7)?

MR HANSON:  Yes, Your Honour.

MASON CJ: Whatever the concept of rescission may be under

the general law?

MR HANSON:  Yes - that is the next point we seek to make;

we seek to develop that in the next point.

MASON CJ~ You say the next point but I am asking you 1n

relation to the first point.

MR HANSON: It is not a rescission that section 54(7)

contemplates. You see 54(7) assumes that you are

dealing with a document that is dutiable and it

only applies to a document that is acknowledged

to be dutiable and the rescission it contemplates

is a rescission that sweeps away the liability

to duty and if the character of the document remains
which made it liable to duty well then it cannot
be a rescission within subsection (7) and looking

at the character of this document it did not alter

from start to finish. It was an agreement to sell

to A or to Band that character was not altered

by what wa.s ~·on~: 1-~n ,..1 '.? .~ (" 1 '"'· ._1 s ,.) 7 3

MASON CJ:  Yes.

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BRENNAN J:  The argument against that, Mr Hanson, is that

the character which made it dutiable was the

agreement to sell to A.

MR HANSON:  We would not concede that, Your Honour.

BRENNAN J: Well, I understand that.

MR HANSON: It is in substance and it is the substance that

the Court and the Commission should look at. It
is, in substance, an obligation on the part of
the vendor to sell land to A or a substitute purchaser.
Now, the only distinction is instead of conveying
to the substitute purchaser the promise is to enter

into another contract with the substitute purchaser

which itself, of course, contains an obligation

to convey.

DAWSON J: Well, of course, you could look at it another

way:  you can say it is an agreement to sell to

A or an agreement to sell to Band if what eventuates

is the agreement to sell to B that is the agreement

which should be taxable.

MR HANSON:  Your Honour, it is a problem characterizing the agreement. We must not forget that the second

agreement was entered into and duty paid; the second

contract was duty paid and the only question is

what became of the first document that was subjected

to duty and, on the face of it, it is, indeed,

a contract that is dutiable - an instrument that

is dutiable and if the duty is to be remitted well

then it must be seen to be within one of the exemptions.

As Mr Gzell has already drawn to your attention

there are a number of provisions in 53 and in 54

which guard against double duty and if, indeed,

there has been a sale and a purchase as an agent

double duty is remitted. If a number of documents

have been put together which evidence what is really

only one transaction what would otherwise have

been double duty is remitted.

is just another exemption for a document which And section 54(7)

is, on its face, and which is accepted to have

been dutiable.

DEANE J: In one sense your case is exposed most clearly,

is it not, if you alter clause 23 to accord with what happened; that is, you simply cross out the
words "at any time" and the words "be entitled

to"?

MR HANSON:  Yes, Your Honour.

DEANE J: If that were done, it would still be a contract

tor sale.

MR HANSON:  Yes.

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DEANE J:	The query then would be whether when the very thing
that the contract provided for had come about
it had been rescinded for the purpose of the section.
MR HANSON:	Yes, Your Honour.

DEANE J: Which is largely a matter of impression - - -

MR HANSON: Yes, it is. In this regard, could we simply

refer Your Honours to, by way of an example of

what we say happened, another case VICKERY V WOODS.

It is mentioned in the judgment of Mr Justice de Jersey

at page 187 of the record. I will not take

Your Honours to the judgment; the citation is

85 CLR 336 but it is a stamp duty case and there

is a passage in the judgment of Mr Justice Dixon

at page 345 where he comments that:

the transaction took the course which the

contract entered into by the appellant

contemplated.

We say those remarks are perfectly apposite to

this case here. That was a case of a man contracting

on behalf of a company yet to be incorporated.

So that is what happened here; everything contemplated·

by the contract occurred.

Your Honours, if I could pass on to our second

point and it is that rescission within subsection (7)

means rescission of the whole of. the contract and,

in our submission, there must be a releasing of

both parties from all of their rights and obligations

and if there was a rescission within subsection (7)
there would have had to have been a release of

their obligations under clause 23 as well.

Now, I understand it to be conceded that that

has not happened. I understand it to be conceded

that the indemnity contained in the last paragraph

of clause 23 is an ongoing obligation.

GAUDRON J: Is it repeated in the document which appears

at page 162 or is that a different matter?

MR HANSON: Well, we say it is not repeated, Your Honour,

for this reason: if you look first at the indemnity
itself in clause 23 - it appears best at page 4
of the record. Before I read it to you, could

I say that we read it as an indemnity against all

stamp duties including the new contract. Could

I ask Your Honours then to read the indemnity?

Now, that indemnity does not correspond with the

indemnity in clause 3 on page 162. ·

BRENNAN J: Well, what is the effect of clause 2 on the

indemnity at page 4?

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MR HANSON:	Yes, Your Honour.	Now, on the face of it, it

purports to release the parties from all of their obligations and, on the face of it, would include

their obligations under clause 23. However, reading
the document as a whole, if that were the intention

why does it recite the terms of clause 23 and recite

that the steps contemplated by clause 23 have been

followed, because that is what the recitals do.

It is a curious way of rescinding, simply, the

whole of the original agreement, including clause 23,

to recite that you appear to be proceeding under

clause 23.

BRENNAN J:  The answer to your question may be: for the benefits

of the Stamps Commissioner.

MR HANSON:  Of course, Your Honours, I think appreciate that

it has always been our submission that the use

of the word rescind is a misnomer anyway. Looking

at the substance of what they did, there has not

been a rescission. They cannot achieve a rescission

by bandying the word "rescission" around; you have

to look at what they did and, although on the

face of that, they do, indeed, release each other

from the performance of the contract and from all

obligations on the part of each of them, in substance,

to answer Your Honour, they were not doing that.

If you look at the recitals in each of the

documents brought into existence that I have brought

to your notice, they all recite how the parties

are proceeding under clause 23. If we go to page 166

which is the initiating document - it is called

a request to novate in favour of the new purchaser -

and it begins:

Pursuant to the provisions of Clause 23 -

DEANE J:	Except you cannot really go as far as you go in 2,
can you, in that - - -

MR HANSON:	In what, Your Honour - I am sorry?
DEANE J:	You cannot really go so far as you go in this
submission 2 in that every vendor and purchaser
contract contains provisions allowing the vendor to rescind and defining what is to be done with
the money -
MR HANSON:	They do.

DEANE J: ~ - - and it could not really be suggested that

such a clause precluded the rescission by the vendor

being a rescission for the purposes of section 54(7).

MR HANSON:  No, we would not contend that, Your Honour.

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DEANE J:	Which means	. your argument has to be put on a

more substantive basis, has it not, and that is

that if all the contract does is to govern rights

on an unintended event which brings the contract

substantially to an end it will not prevent rescission

but if what the clause does is to provide a means
of pe.rfo.rmance of 'the contract, it will not be a

resc1ss1on.

MR HANSON: That is a better way of putting it, Your Honour.

DEANE J: Well, do not embrace it - I am just sort of trying

to test it out actually.

MR HANSON:  I accept, Your Honour - well, a subject to finance

clause would be a typical example and things remain

to be done once it becomes operative - the deposit

is to be returned et cetera. We accept that that

would clearly be within the subsection. It is

an example of what Your Honour has in mind but

looking at the character and substance of what

these people did we come back to saying what we

have said before.

BRENNAN J:  Could I put an alternative construction of ."rescind"

in subsection ( 7) to you for your comment a.nd

that is a rescission of those provisions of the

contract which make the contract one liable to

duty under subsection (l)?

MR HANSON:  Something that is not there, Your Honour.

BRENNAN J: Well, that is your comment?

MR HANSON:  Yes, that submission is putting words into the

subsection that are not there. We submit you read

it this way: it refers to a contract which "would

otherwise be chargeable" - those are the opening

words. So you have a contract which is, prima

facie, dutiable and then it goes on to say that

duty shall not be chargeable or:

shall not be claimed where there is produced

to the Commissioner evidence satisfactory
to him that such contract or agreement was

rescinded.

So you assume a dutiable contract; the only requirement

then is that you come up with some evidence that

the character of the contract has changed or,

alternatively, that the whole thing has been swept

away. In either event it suits our purpose; the

character of this contract remained. the same and

the w~ole of the obligations w~re not swept away.

So 54(1) looks at a dutiable contract and contemplates

some event. I suppose that means it should no

longer be dutiable.

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Our basic submission is; Your Honour, that

it is quite fallacious to look at the individual

clauses and the individual obligations in the

contract - it is the document as a whole, because
what the appellant seeks to do, it seeks to split

up the contract into a promise to convey to the

appellant and a promise to sell to somebody else

and wants to say there is a rescission of the first
promise and wants to ignore the second promise -

that is what the appellant wants to do.

Your Honours, we have a submission on novation

which is at paragraph 3 of our written hand-up.

Not a lot was said about novation in the arguments

for the appellant so I probably do not need to

say any more than what we have said there in writing.

DEANE J:	Mr Hanson, is there any authority on the question
whether a contract to enter into a contract for the sale of land is a contract for the sale of land within section 54?
MR HANSON:	Not that we are aware of, Your Honour.
DEANE J:	I see, thank you.
BRENNAN J:	How are options taxed?
MR HANSON:	Options are specifically mentioned in section 54

and they are dealt, I think - primarily they are

dealt with as contracts for sale - section 54(3),

Your Honour.

(Continued on page 34)

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MR HANSON (continuing) : Your Honour, you see the scheme of

the Act, in our submission, is that any double

dealing attracts double duty. Now, that includes options. It includes nominee sales. It includes subsales. Those situations are dealt with in

subsection (3), subsection (6) - in the separate

paragraphs in subsection (6) -with an exemption,

where there is, indeed, really only one transaction
no matter how many documents and with the further

exemption in subsection (7) with which we are

concerned. So, to come to our submission

number 4, the Court and the Connnissioner are

obliged to look at the substance of what the

parties did and,looking at the substance of what

was done here, it was an agreement and a transaction

where there were two sales. There was a subsale and

a subsale of profit. You will see in the record the

agreement between Tealmont and the eventual purchaser.

I think Mr Gzell said that there was a premium paid or a price paid by the purchaser for having Tealmont

activate clause 23 and if you look at that document
which is page 43 of the record you will see that

Tealmont made a profit of some $280,000 on the

further transaction.

BRENNAN J: Was this taxed as an agreement on sale?

MR HANSON: There is a stamp on it there, Your Honour,

at 50 cents.

BRENNAN J: It was an agreement under hand only.

MR HANSON: Apparently, Your Honour, yes. While we are looking

at that document, could I ask Your Honours to notice

this - sorry, not that. The new contract with the

new purchaser bears a date, 25 January. That is the contract at page 127. It bears the same date as the

original contract. For what it is worth, that date

cannot be right because the request to novate is
dated 11 February and all of the other documents.

The request, which we have already shown you at

page 166, is in February.

Your Honours, looking at the substance of what

they did, the subsections which attract double duty

are set out at the foot of the second page of our

written submissions in paragraph 4(b) and I will not

read them to you but they deal with what we have

suggested are properly called double dealings and

this was, in substance, a double deal.

Could we turn to section 81 of the STAMP ACT.

It is, in our submission, indistinguishable from

section 260 of th,2.· INC0ME TAX ASSES3~·ili'i?l' AC'.i.. -,~c:.

do not, of course, seek to step outside the documents

in the record book and our submission would be that

those documents in the record are sufficient to

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attract the operation of section 81. So, in

spite of the conunent, the matter has not been

debated below.

GAUDRON J: But, surely it is not the point whether or not

you wish to step outside the documents. Rather,

the point is whether it might have been open to

the taxpayer to step outside the documents.

:MR HANSON:  Yes, I accept that point, Your Honour.

GAUDRON J: Yes.

:MR HANSON:  That assumes the purchaser may have wanted to put

some oral evidence before the Conunissioner.

Presumably, there are no more relevant documents because the Act requires all relevant documents and, in fact, all relevant evidence, I think, to be

submitted to the Conunissioner.

BRENNAN J: How do you seek to apply section 81? What are

you saying is the operation of 81 here?

:MR HANSON:  That the parties have adopted the word "rescind"

and have adopted this method of interposing a

contract between the vendor and the original
purchaser with no other purpose in mind and no

conunercial advantage other than in an attempt to call it a rescission within subsection (7). But

that was the purpose for which this exercise -

BRENNAN J: Well, it either is or it is not, is it not?

:MR HANSON: Either is or is not a rescission?

BRENNAN J: For the purposes of subsection (7).

:MR HANSON:  Yes, Your Honour.

BRENNAN J: Well, how does section 81 come into it?

:MR HANSON:  Only in this narrow way. If it is held to be a

rescission, well, then, we would say the parties

have got themselves into that concept through an

artificial series of manoeuvres which have no

legitimate business purpose, no other purpose,
and we can satisfy them with the tests spelled out

in section 260.

BRENNAN J: Well, now, 81 arises only on the hypothesis that

this is a document which is entitled to the refund

under subsection (7).

:MR HANSON:  Entitled 1:'0 be r.al J.q!J .1. rescission.

··,., ' ' ? i·

BRENNAN J: Entitled to be called a rescission under

subsection ( 7).

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MR HANSON:  Yes, Your Honour, yes. Otherwise, we do not

need it. I do not need section 81.

BRENNAN J:  It is an agreement which was drawn up in that

form?

MR HANSON:  For no other purpose and for no business purpose

other than an attempt to attract the label "rescission"

within subsection (7) but the manoeuvres achieved no

business purpose whatever.

BRENNAN J: Well, if what you say is right, why would it not

have been open to Mr Gzell to seek to show that

there was a business purpose?

MR HANSON:	Well, I would not deny that he can do that in reply.
BRENNAN J:	No, I am not saying in reply.  I am saying in the

stated case.

MR HANSON: In the stated case.

BRENNAN J: Yes.

MR HANSON: That is so, Your Honour, yes.

BRENNAN J: Well, then, how can you raise it?

MR HANSON: Well, only on this basis: the Act requires all

relevant documents and, I think, all evidence to be
put before the Commissioner, so one commences with

the presumption that everything necessary to make

an assessment has been put before the Commissioner.

MASON CJ:  Now, Mr Hanson, is that all you wish to put to the

Court in support of the proposition that section 81

is still an open question, notwithstanding the form

of the stated case and the way in which the case has
been presented below without the absence of appropriate

findings?

MR HANSON:  That is it in a nutshell, Your Honour. We were going

to rely upon the judgment of Mr Justice Gibbs in

GULLAND and Mr Justice Dawson in GULLAND.

Mr Justice Gibbs at page 65, Mr Justice Dawson at

page 110 and we have - although the case is not on

our list of cases - copies of the case here if the

Court wants to look at the judgments on which we

rely. Other than that, no, I have said everything

I want to say. We do want to say that the principles

as there spelled out in those judgments apply precisely

to this situation.

Perh.?rs I should. say ;.:his: we need to sLuw th&:..

there was no business purpose in what they did. It

may be said against us, as Your Honour Justice Brennan

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has observed, that these manoeuvres relieve the

original purchaser from an obligation to specifically

perform and to pay. So, it may be said that, in that

regard, there is a business purpose for the original

purchaser.

Our reply to that would be that clause 23(c)

gives the original vendor the option to demand
guarantees from anybody that they may reasonably
require them from and it contemplates personal
guarantees from the directors and shareholders of
the original purchaser. So, perhaps, it could be
said that there has been an even more onerous

obligation imposed if the vendor calls for a

guarantee contemplated by subclause (c) although

accepting that the original purchaser disappears from the scene, disappears from any liability in place of the original purchaser, the vendor was

entitled to call upon the substitute guarantees

which may have been more beneficial to the vendor.

So, in anticipation of that submission, I should say

that.

MASON CJ: Yes, thank you, Mr Hanson. Yes, Mr Hanson?

MR HANSON:  Section 24(1) is the one dealing with stating

a case. Could I refer Your Honours to the section

I am looking for in a moment. That is not the section I want. The section I wanted is the one

that requires an applicant for assessment to put

before the Commissioner all relevant facts - that

is 16, I am told:

All the facts and circumstances affecting the liability of any instrument -

Now, assuming the statute has been obeyed, one would

think that there was nothing more that the applicant

could say to the Commissioner if he responded by

saying he relied on section 81. That is why, in

our submission, there should not be any restriction
on the argument.	Thank you, Your Honour.

MASON CJ: Yes, thank you, Mr Hanson. Yes, Mr Gzell.

MR GZELL.:  Your Honours, in relation to our learned friend's

proposition at paragraph 3 of their summary that

novation must be between the original parties, we

would cavil with that proposition. In the judgment of Lord Selborne in SCARF V JARDINE, (1882) 7 AC 345 at page 351, the L:>rd Chancellor said this:

In the Court of first instance the case was	t;:·c::ated r2r.~.l} as 0rL >~ .,Jhc.::.: is ca:i.led ,:novation, 11
which as I understand it means this - the

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the term being derived from the Civil Law -
that there being a contract in existence,

some new contract is substituted for it,

either between the same parties (for that

might be) or between different parties;

the consideration mutually being the

discharge of the old contract.

It may assist Your Honours in the only work

on the subject that we found in the resources of

our library, a fairly old book but, none the less,

a well-written one, in our submission, of 1916 by

Morison on rescission of contracts in his chapter

on novation at page 26. He talks about novation

under two classes of cases; first, where the

parties to a contract make a new contract and

second, tripartite agreements where the obligation

of a third party is involved and we would submit

that it is insufficient to suggest that merely

because the substituted contract was between the
appellant and Permanent Trustee and not between

the appellant and Tealmont, that it could not

amount to a novation.

In respect of our learned friend's observation

in paragraph 4(b) of their summary that there was,
in substance, an on-sale attracting double duty

under other sections of the Act, that is not the

case that was stated by the Commissioner. The

case that was stated by the Commissioner was the

narrow case, that he was not satisfied with rescission. case upon the basis of exigibility under any other provision. ~And with respect to the arguments on section 81 - - -

MASON CJ: Well, the Court need not trouble you on that,

Mr Gzell.	The Court does not propose
to - - - ·

MR GZELL:	have been a little hasty in suggesting that there Might I say, finally, Your Honours, that I may
was an ongoing indemnity in respect of stamp duty
under clause 23. It may well be that the deed of
rescission, when properly construed, discharges that obligation and substitutes for it a new
obligation under clause 3 of that deed.
MASON CJ:	Thank you, Mr Gzell. .
MR HANSON:	Excuse me, Your Honour.
MASON CJ:	Yes, Mr Hanson.
MR HANSON:	I did mean to hand up the amending Act.

Your Honours may want to look at the amending Act

on the motion to rescind special leave. There are

paIIJPhlet copies there, of the amendment that altered

section 54(7).

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MASON CJ:	Thank you.
BRENNAN J:	Do not tell me the STAMP DUTIES ACT has been

consolidated at last.

MR HANSON:  I think it has just been made far more complicated,

Your Honour.

MASON CJ:  The Court will now adjourn.

AT 11.50 AM THE MATTER WAS ADJOURNED SINE DIE

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