Commissioner of Stamp Duties v Pendal Nominees Pty Limited

[1988] HCATrans 208

IN THl HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S61 of 1988

B e t w e e n -

COMMISSIONER OF STAMP DUTIES

Applicant

and

PENDAL NOMINEES PTY LIMITED and

ANOR

Respondents

MASON CJ
BRENNAN J
DEANE J

DAWSON J

TOOHEY J

Pendal(2)

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 14 SEPTEMBER 1988, AT 10.18 AM

Copyright in the High Court of Australia

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MR C.S. SHELLER, OC: If the Court pleases, in that matter

I appear with my learned friend, MR R.R. SORENSEN,

for the appellant. (instructed by Crown Solicitor

for New South Wales)

MR D.G. HILL, QC: If the Court pleases, in this matter

I appear with my learned friend, MR M. WALTON,

for the respondent. (instructed by Blake Dawson

Waldron)

MASON CJ: Yes, Mr Hill. Mr Sheller.

MR SHELLER:  Your Honours, I hand up our outline of submissions.

We have, Your Honours, included in that submissions

on the appeal and also, as a matter of convenience, we have included submissions on the various notices

of contention but I would not ask Your Honours to

go to that second part. The first two pages deal

with the appeal.

MASON CJ: Yes.

MR SHELLER:  Would Your Honours wish me to proceed or to read

that first?

MASON CJ:  We might read this before you proceed, Mr Sheller.

MR SHELLER: If Your Honours please.

MASON CJ: Yes.

MR SHELLER:  If Your Honours please, this is an appeal from

the New South Wales Court of Appeal, a unanimous

decision of three members of that court, and it

arises out of an assessment to duty of a document

which is called the the share sale deed which is

set out at pages 31 to 86 of the appeal book.

The stated case which Your Honours will find commences at page 3, sets out a number of the

important parts of that share sale deed and if I

could invite Your Honours first to go to page 4

of the appeal book, paragraph 4 of the stated case,

Your Honours will see that by the share sale deed,

which was made on 28 June 1983, the second respondent,

BT Australi~ agreed to purchase all the shares in a

company called Suburban Centres (Seven Hills) Pty

Limited from a company called RDC Holdings Pty

Limited.

(Continued on page 3)

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MR SHELLER (continuing):  There were 750,000 shares

and the consideration was $7,936,791 and that

appears at page 6 in the stated case. Another

party to the share sale deed was the first

respondent, Pendal Nominees Pty Limited, which

was a wholly owned subsidiary of BT Australia.

BT Australia, as appears on page 4 at about

line 7, purchased in its capacity as trustee of

the BTA Property Trust, and that was a unit trust

established by a deed of trust made on

1 December 1976. That deed of trust is set

out at page 9 through to page 30 of the appeal

book and again important parts of that deed of

trust are set out in the stated case.

BT Australia was empowered by the trust deed

to cause assets constituting the fund to be vested
in a nominee and that appears from clause 29(j)
of the trust deed and clause 29(i) of the trust

at about line 17:

deed is set out in the stated case at page 3.

the Trustee may:

(aa) cause all or any of the assets
constituting the Fund to be vested in

a nominee of the Trustee to be held

by such nominee upon the trusts of

this deed; ................... .

and for all purposes of this deed

investments vested in a nominee ... of
the Trustee shall be deemed to be

investments or property held by the

Trustee".

(Continued on page 4)

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MR SHELLER (continuing): Clause 1.4 of the share sale deed,

which is set out on page 4 in the stated case,

paragraph 5 provided that:

RDC shall on completion deliver to BTA transfers of the Seven Hills Shares in

favour of PN and PN shall hold such shares

as nominee for BTA.

It is that clause that is central to this case.

The share sale deed imposed upon RDC the obligation to delivery to BTA duly executed transfers in

favour of Pendal Nominees. That, Your Honours,

is found in clause 3.3.1 which is set out in the

stated case at page 4 in paragraph 6. That is in

subparagraph (a) of that clause. Then further

down the page, on page 5, in clause 3.3.4:

RDC and Seven Hills shall cause directors'

meetings of Seven Hills to be held at which: (a) the registration of the transfers to PN of all of the Seven Hills Shares shall subject

to payment of any stamp duty thereon be

approved.

Further down page 5, Your Honours, in paragraph 7,

Your Honours will observe that:

Exchange of the parts of the Share Sale Deed

and completion thereof took place simultaneously

on 28 June, 1983.

Your Honours, the transfer of the shares is to be

found at page 87 of the appeal book, and, Your Honours,

in due course I will come back to say a little more

about that.

(Continued on page 5) I

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BRENNAN J: Is it annexed to, or part of the stated

case?

MR SHELLER: Yes, Your Honour. Indeed, all those

documents - Your Honour will see that in fact the transfer is annexure C and all

the material through to and including that

page 87 was part of the stated case.

Your Honours, if one then goes over to page 6 of the appeal book, in paragraph 10

Your Honours will see that:

Apart from ad valorem stamp duty

on the sales of shares provided for -

in the share sale deed

the Commissioer of Stamp Duties has

assessed the said Share Sale Deed to

ad valorem stamp duty in the sum of

$47,620.80 under paragraph 2(a) of the

head of charge "Declaration of Trust"

in the Second Schedule ..... on the

basis that clause 1.4 of the Share Sale

Deed makes it a declaration of trust

in respect of the Seven Hills Shares

the value of which was $7,936,791.

Now, Your Honours, the form of head of

charge in respect of declarations of trust is

almost the same as the current form of it.

Your Honours, we have handed up a photostat

of it in the form that it was relevant to this

assessment. Your Honours, the difference between

the current form and the rorm that the head of

charge was then in is not material, but, if I
could just indicate it to Your Honours: firstly,

the amount of duty against (1) and' against (3) was $6 instead of $10;and paragraph (c) of (2)

has been subsequently introduced. (Continued on page 6)

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MR SHELLER (continuing):  Your Honours, we have in Court,

if it is necessary to do so, copies of the print

of the Act in the form that it then was but it

may be more convenient, Your Honours, to proceed

on the current form subject only to this head

of charge and we think there are no material

differences. Your Honours, the head of charge

under which the share sale deed was assessed

as a declaration of trust was (2)(a) and that provides

that:

Any instrument declaring that any property

vested or to be vested in the person executing
the instrument is or shall be held in trust
for the person or persons or purpose or
purposes mentioned therein notwithstanding
that the beneficial owner or person entitled

to appoint that property may not have -

joined therein or -

assented thereto.

And, Your Honours, the Court of Appeal in its

judgment was of the opinion that this share sale

deed was an instrument that fell within head

of charge (2)(a). However, the dargeability of
the instrument depended also on whether it could
be said to have fallen alternatively under either
one of two others of the parts of the head of

charge, the first of those being paragraph (1):

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.

Or, alternatively, (3Xb)

Any such instrument as aforesaid by which .....

the trusts declared are the same trusts
as those upon or subject to which the same

property was conveyed to the person declaring

the trust by an instrument duly stamped
with ad valorem duty under this Act -

Your Honours, one of the questions raised in

the stated case at page 7 was whether or not

paragraph (1) applied. The Court of Appeal held

that the instrument did not answer the description

of paragraph (1). However, also argued was

paragraph (3)(b) and this appears to have been

argued in the Court of Appeal and not before

the court at first instance. At any rate, it

was not subject of a direct question in the stated

case - we do not suggest that anything turns

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upon that but I just indicate that to Your Honours

as a matter of history.

The Court of Appeal was of opinion that

of paragraph (3)(b) and, accordingly, the amount
of duty on it as a declaration of trust was the
amount fixed in respect of that paragraph. the share sale deed answered the description should have been $6.

DEANE J:	Mr Sheller, what is the provision that makes
(1) and (3) override (2)?
MR SHELLER:	(3) seems to override (2), Your Honour, by

virtue of its introduction:

Any such instrument as aforesaid by which

which seems to suggest that you go into (2)(a)
and then you can come out again, as it were.
As to (1), Your Honour, that is, if I may say

so, something of a puzzle. The case seems to have proceeded on the basis that (1) also was

a sort of escape from (2)(a) but, Your Honour,

there has, I understand, been little - or there

is little authority on (1) and I cannot say that

there has ever been what I understand as any

adequate explanation as to why one would choose

the lower of the two duties rather than the higher

which would be normal according to SPEYER's

case and so on that the Commissioner could select

the higher.

(Continued on page 8)

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MR SHELLER (continuing):  But what I can say to Your Honour

is that this case seems to have proceeded on the

basis that if one came within 1.1, or the duty

fixed by that paragraph rather than the ad valorem

duty under (2) (a) - - -

DEANE J:	So we need not trouble about that question?
MR SHELLER:	I think that is a correct approach, yes, Your Honour.
DEANE J:	And while I am interrupting you, what is the
provision of the second schedule pursuant to which the deed was stamped as a transfer of shares?
MR SHELLER:	Your Honour, it was stamped under section 41.

I think, Your Honour, we deal with that in paragraph 3

of our written submission. It was stamped, Your Honour,

under section 41(1) as an agreement for sale or

conveyance of property being stampable as if it

were a conveyance which then brings into operation

section 66, Your Honour, which deals generally with

duty on conveyances and ultimately the application

of the second schedule, under the heading, Your Honour,

"Agreement for Sale" or "conveyance", which then

says the same duty as on a conveyance, so one then

follows that through to conveyances of any property.

DEANE J:	Thank you.
MR SHELLER:	Now, Your Honours, in the Court of Appeal, the

judgment on this, with which the other members of

the court agreed, was that of Mr Justice Mahoney

and the particular part in which he deals with

paragraph(3~b) starts at page 133 and runs through

to page 135 and it is at page 135 that His Honour

said that in his opinion:

the duty chargeable in respect of

the declaration constituted by

clause 1.4 is not ad valorem duty

but a fixed duty provided by

paragraph 3 (b) .

Your Honours, it is against that that the appellant

appeals. Your Honours, the ground of appeal is

that the decision of the Court of Appeal, in that

respect, is contrary to the opinion of the majority

of this Court in DKLR HOLDING COMPANY PTY LIMITED V

THE COMMISSIONER OF STAMP DUTIES, to which I will
come back, Your Honours, but it is reported in

149 CLR 431 and is contrary to the plain language of

the paragraph its elf. And that can be pointed up,

if I could invite Your Honours to go to the judgment

of Hr Justice Mahoney at page 134, at about line 10,

where His Honour said:

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MR SHELLER (continuing):

The property was conveyed to PN by

an instrument duly stamped with ad valorem

duty under this Act.

Now, Your Honours, of that we say two things:

firstly, that at the critical time, so far as the

declaration of trust was concerned, the shares had
not been conveyed and, secondly, that the instrument
of transfer was not stamped with ad valorem duty
under the Act but, in fact, was stamped with a
fixed duty of one dollar.

Now, Your Honours, in that regard, if I could ask Your Honours to go to section 65 of the Act

which is the definition of "conveyance" and "convey"

and:

For the purposes of this Act the expression

"conveyance" -

is defined as including

any transfer -

and so on and then, further down:

"convey" has a meaning corresponding with

that of "conveyance".

By contrast with that, Your Honours, if one

goes to section 41(1) which makes:·
Every agreement for the sale -

and this is the section that I referred to before -

\

or conveyanc.e of any property ..... charged

with the same ad valorem duty ..... as if

it were a conveyance of the property agreed

to be sold or conveyed

Subsection (4) of that same section, in paragraph (a),

Where duty has been duly paid in conformity

with the foregoing provisions of this section,

the conveyance made in conformity with the

agreement or agreements shall not be

chargeable with ad valorem duty, but shall

be chargeable with a duty of one dollar -

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MR SHELLER (continuing):  Now, Your Honours, the share sale

deed was stamped pursuant to section 41(1), and that

is referred to,Your Honours,at page 90 lines 15 to 17

in the appeal book as part of the, I think, agreed

material between the parties. That is in

His Honour Mr Justice Hunt's judgment at line 15.

If one goes to page 87,the transfer, one sees at

the top that that was stamped under section 41(4)

with the nominal fixed duty of $1 in accordance

with that section. The appellant's submission is

that at the time, the point of time, when the

instrument became chargeable as a declaration of

trust under paragraph(2Xa), that is to say, at the

point of time when it was first executed, the

property had not been conveyed and, alternatively,

or in addition, at no time under(~(b) was the

instrument by which it was conveyed stamped with

ad valorem duty.

Now, Your Honours, the point of time, we would

submit, when one has to look to see whether within

(3)(b) the property was conveyed or had been conveyed

is the point of first execution, and that appears,

Your Honours, from section 38(1) of the Act which provides that:

(Continued on page 12)

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MR SHELLER (continuing):

Every person primarily liable with
respect to any instrument or matter of

the nature mentioned in the Second Schedule

hereto is personally liable to the Crown

for the payment of the duty so chargeable

on such instrument immediately upon the

first execution thereof, and every such
person may be sued for the amount of such

duty as for a debt due to the Crown.

In section 26 one finds the Act dealing with what

is meant by first execution of an instrument,

where it says:

For the purposes of this Act an

instrument is deemed to be first

executed the first time that it is signed

and sealed, or signed (as the case may be)

by any party thereto.

We would submit - and this is borne out in

addition by reference to section 25 which deals

with the time within which duty is to be paid

running from its first execution - we would submit

to Your Honours that the theory of the Act is that

liability to stamping proceeds from the point of

first execution and that the liability of the

instrument must be judged at that time on the

operation it is capable of having. Your Honours,

that proposition is supported by two passages

in the judgment of Your Honour the Chief Justice

in DKLR, to which I will come back, but is also

borne out by the language of Sir Owen Dixon in

COMMISSIONER OF STAMP DUTIES V HOPKINS,

71 CLR 351, and Your Honours, the particular

passage is to be found at page 379, Your Honours,

this being a case in which a question arose as

to whether a settlement had been executed in

Queensland or in the United Kingdom and the fact

was that the trustee had executed it first

in Queensland.

(Continued on page 13)

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MR SHELLER (continuing): There had then been a transfer

of the subject of the trust to the trustee and
then the settlor had subsequently executed

the deed in the United Kingdom. Against that

background His Honour said, on page 379, the

second new paragraph on that page:

So far as the legal operation of

the instrument is concerned, it must

be borne in mind that its trust came into

effectual operation by reason of the

trustee having executed it, and of the

subsequent vesting in him of the trust

property.

Now, if I could just pause there to make this

submission to Your Honours: that for stamp

of charge 11Declaration of Trust:', the instrument	duty purposes, we would submit, under the head
comes into effectual operation as from the
moment when it is first executed by any party
thereto and in particular, in this case, by
Pendal Nominees and that one does not wait for
the parts to be exchanged, or indeed for any
other act of any of the parties thereto.

MASON CJ:  What do you mean by effectual operation in

that context?

MR SHELLER:  By that I mean really effectual from the

stamp duty point of view, Your Honour.

MASON CJ: It is a stampable document?

MR SHELLER:  It becomes a stampable document. One does

not wait for it to become an effectual trust

or have some other operation at law by virtue

of further acts being performed by the parties.

1

(Continued on page 14)

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MR SHELLER (continuing):  His Honour then went on to say:

As Philp J has pointed out, the theory of

the Act is that liability to stamping may be

determined when a document is prepared and

before it is executed.

Now, under that particular legislation, Your Honours,

section 26, which is found at page 373 in the

report, in fact imposed a liability to duty on

preparation and before execution, but applying

that to the system under the New South Wales Act

we would submit that the theory is that the

liability to stamping must be determined at the point of first execution. Then His Honour went

on and said:

But when the operation of an instrument

depends, as it sometimes must, on circumstances,

the liability of the unexecuted paper must be

judged on the operation it is capable of having.

We would say the liability of the paper when first executed must be judged on the operation it is

capable of having. Your Honours, as I indicated

paragraph (3)(b) was considered by this Court in

the DKLR HOLDING, (1982) 149 CLR 431 case.

Your Honours, may I point out immediately that

the form of the head of charge material to

DKLR HOLDING, was a paragraph(2),which was almost

exactly the same as the present (2)(a) and no

(2)(b) or (2)(c); (3)(b) was in the same form then

as it is now. So that when the Court is speaking

of paragraph (2) it is speaking of the equivalent
of what is currently, for the purpose of this

case, (2)(a).

Your Honours, in DKLR HOLDING, 'a company which

was known, for the purpose of the judgment, as	29 Macquarie, was the registered proprietor of
certain land. An order of events took place,which
is conveniently set out in the report, beginning at the bottom of page 432 and running over through
the first paragraph on page 433. The order of
events was that:

the directors of 29 Macquarie resolved to
request DKLR to act as trustee for it of

the land on the terms of a -

particular -

declaration.

Second:

The directors of DKLR then resolved that that

company execute the declaration of trust.

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Third, that:

The directors of 29 Macquari~ ..... resolved -

to "affix" the seal of that company to a transfer

of the land. Then the next two events are

critical: fourth, that:

The declaration of trust was then executed

on behalf of DKLR -

in respect of the land for the benefit of 29 Macquarie.

Then, finally, that:

A memorandum of transfer from 29 Macquarie -

of the land -

to DKLR was then executed.

So that materially the Court was considering an order of events where under the declaration of trust

preceded the transfer of the land. The questions

in the stated case with which the Court was

concerned are set out in the judgment of the

Chief Justice at the bottom of page 445 and

running over to 446. Your Honours, the questions

are, firstly - and in a sense they are in a reverse

order, but if I can go to them one by one in the

order they appear in. Firstly:

whether the said memorandum of transfer -

the last document, was -

a conveyance for nominal consideration

upon the appointment of a trustee -

and, therefore, if it was, whether it fell within

section 73(2A) of the Act in its then form.

Your Honours, that section is set out at the

bottom of page 444 in His Honour's judgment; if

it applied the duty was $1.

(Continued on page 16)

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J:1R SHELLER (continuing):  The majority of the Court,

Your Honour Justice Brennan dissenting on this,

held that the declaration of trust was an

appointment within the meaning of that section

and that, accordingly, the section applied and

the amount of duty was $1 on the transfer.

The second question - or it is the third

question that follows upon that is (c) at the

top of page 446:

Whether the said declaration of trust .....

is a declaration of trust liable to duty

pursuant to paragraph 3(b) under the

heading "Declaration of Trust".

And, Your Honours, the majority of the Court were

of the view that the instrument did not fall within

paragraph(3)(b). Again, Your Honour Justice Brennan dissented from that view and it should be said that

Justice Aickin was of the view that it did not fall

within (3) (b) because it did not fall within

paragraph (2) in the first place. So that if one

looks at these paragraphs as bringing something

in under (2) and then letting it out under (3)(b),

His Honour was of the view that it never came in

under (2) so that it was not let out under (3)(b).

Your Honours, finally, the Court considered

under (d) whether the declaration of trust was

liable to ad valorem duty as falling within

paragraph (2) and, as I said to Your Honours, that

substantially is in the same form as (2)(a) and

Your Honours fill find (2) in its then form set

out in His Honour the Chief Justices's judgment

at page 438, the first quotation on that page,

the only difference in language being that in

the second line the word '·'same" has gone and

"instrument" been substituted for it. There is

apparently another slight change which I will

find and give to Your Honours in a moment.

Now, Your Honours, so far as (2) was concerned,

all members of the Court except Justice Aickin held

that the declaration of trust was one that fell

within the paragraph. Now, Your Honours, a good

deal of time and attention in the judgments was

directed to the effect of the transfer which

sought to transfer nothing more than a bare legal

estate and I mention that, Your Honours, because

the parts of the judgments that deal with that can

be passed by when one comes to look at what the

Court said.

MASON CJ: Well, the reason for that was it was the substantial

argument presented to us.

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MR SHELLER:	Yes.	I am not being critical, Your Honour.

MASON CJ:	No, no, I did not suggest that you were.
MR SHELLER:	It is just that, in reading through the

judgment, one comes to quite substantial

passages which are dealing with that question.

MASON CJ:  Yes.

(Continued on page 18)

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MR SHELLER (continuing):  Your Honours, that is the order

of the questions but what we would submit

relevantly was decided was that, firstly, the

majority were of the view that the declaration

of trust fell within paragraph (2); secondly,

that it did not fall within paragraph (3)(b);

and, thirdly, though this is not relevant to

this case - but, thirdly, that the transfer was

subject only to a fixed nominal duty because

of the operation of section 73(2A).

Your Honours, if I may then go to the

pas sages in the j u d gm en ts , firs t 1 y , to take

Your Honours to the Chief Justice's judgment at page 438, at the bottom of the page where His Honour comes to deal with paragraph (2) and

the meaning of the expression "to be vested"

and merely to say this, Your Honours, at this

point of the argument, that having considered

the matter His Honour came to the conclusion

which is found at the bottom of page 441 - this

is the last five lines on that page - that:

it was enough that the person making the

declaration shall have the expectation or

intention that the property in question

shall be vested in him, and unnecessary

that the present owner should have any such

intention.

Then, Your Honours, at page 442 at the bottom

of the page His Honour came to deal with

paragraph (3)(b) and His Honour said:

The question then arises whether the

declaration of trust comes within par 3(b)

are in my opinion deliberately used in the

of the description in the second schedule.

In my opinion it does not, for two reasons.

past tense, to refer to a conveyance made

before the declaration of trust was executed.

The framers of the Act no doubt intended

that if the transfer to the person declaring

the trusts had attracted ad valorem duty,

a subsequent declaration of the trusts upon

or subject to which the property was

transferred should excape it. Similarly,

as will be seen, if the declaration of trust

was the first of the documents to be executed,

and attracted ad valorem duty, a subsequent

transfer might escape duty.

And His Honour there was referring to section 73(2A).

The second reason for reaching the conclusion

that par 3(b) is not applicable is that,

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for the reasons I am about to give, the

memorandum of transfer did not attract ad

valorem duty; in those circumstances

obviously the provision does not apply.

And that, again, is, of course, referring to

His Honour's conclusion there that the memorandum

of transfer fell within section 73(2A).	And
then His Honour said:

For these reasons I conclude that the declaration of trust is liable to the same duty as if it were a conveyance, and since,

as I have said, there was no consideration

for it, it was right to charge it to ad

valorem duty under s 66(3)(a) of the Act.

And His Honour deals again with the same point

at page 445, about two-thirds of the way down

the page. He says:

If the memorandum of transfer had been

executed first, and had attracted ad valorem

duty, par 3(b) of the description of

"Declaration of Trust" would have prevented

ad valorem duty from being attracted by

the declaration.

(Continued on page 20)

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MR SHELLER (continuing):  Your Honours, that then led

His Honour, at page 446, to answer the

question (c) "No", and then (d) the amount of

duty, "$50.16''. His Honour Justice Stephen

paragraph of your judgment in the second sentence

agreed with Your Honour the Chief Justice and

said:

The appellant claims that each

instrument is liable to a nominal

duty while the Commissioner claims

that each instrument is liable to

ad velorem duty calculated by

reference to the value of the land

which is the subject of the instruments.

Then at page 452, having set out the facts and

dealt with the arguments relating to what was the

subject of the transfer, came to deal under the
heading of Instrument of Transfer with section 73(2A)
and on that page, again at the end of the first

paragraph, the last sentence under the heading

Instrument of Transfer, Your Honour said:

As the liability of the instrument
to stamp duty is to be determined upon

its execution, it is to be determined

on the footing that it will on

registration vest an estate in the

appellant.

We would submit that sort of approach is consistent

with the approach expressed by Sir Own Dixon

in the HOPKINS case. Your Honour held that the

instrument of transfer fell within section 73(2A)

and that is found on page 453 in the second

paragraph on that page, and Your Honour then went
on to deal with the declaration of trust and

referred, at the top of page 454, to the view

of the majority in the Court of Appeal that:	"to be vested" refer to property
intended to be vested in the declarant
by those persons whose intention would
necessary to effect the vesting.

Then further down that page in the last paragraph, about half-way down it, Your Honour said:

The general rule is that the liability

of an instrument to stamp duty is to

be ascertained by reference to the

circumstances which exist when the instrument is executed, though the
court can have regard to subsequent

events in order to discover the true

position at the time of execution.

C2Tl4/l/HS	20	14/9/88
Pendal(2)

Then over the page on page 455, again just above

half-way down the page, Your Honour said:

We have already noted that the liability

of the instrument to duty is to be

ascertained upon its execution.	More
importantly the amount of duty is

equated to the amount of duty payable

on a conveyance of "the property

comprised therein".

Then, Your Honour, at page 456, in the first

paragraph there, Your Honour said:

The principal objections to the

construction that "to be vested"

means "intended to be vested", at

least when the declaration identifies

the trust property, are based on the

consequences which are said to flow from

it. It is said that the instrument

becomes liable to duty even though it

may for any one of a variety of

reasons fail to become effective to

create a trust - the declarant may not

acquire the property. This may occur

for reasons within or beyond the

control of the declarant. It is his

intention, and perhaps that of the

person directing the declaration, that

is the relevant intention.

(Continued on page 22)

C2Tl4/2/HS	21	14/9/88
Pendal(2)

MR SHELLER (continuing):  Then finally on this aspect,

Your Honours, at page 457, having referred to

TOOHEYS V CO:t1MISSIONER OF STAMP DUTIES, in the

last paragraph on that page, Your Honour said:

That the words "to be vested"

should be read as "intended to be

vested" is supported by the decision

of this Court in TOOHEYS and especially

by the judgment of Chief Justice Dixon.

Your Honour then went on to refer to those passages and that continues to run through to page 459,

the passages supporting that proposition, and at the bottom of the page Your Honour came to deal with a question of the declaration being no more

legal estate; page 460, the compilation of duty;

and then finally on page 461, in the last paragraph

of the judgment, Your Honour answered the questions

asked and paragraph (c) so far as (3)(b) was

concerned, Your Honour answered that question on

the basis that the declaration of trust did not

fall within that paragraph. Your Honour'9 we would

submit that that conclusion could only be arrived

at on the basis that either one or both of the

matters which were referred to in the judgment of the Chief Justice were decisive, that is to say, either that at the relevant time the property had not been conveyed, and/or, that the instrument of

conveyance did not bear or was not duly stamped

with ad valorem duty.

Then in dissent, Justice Aickin,at the beginning

of his judgment, referred to what he described as "two separate questions 11 • The first. of .. those. was the

73(2A) question and the second at the top of

page 462 was the paragraph (3)(b) question. And

His Honour then having dealt with the bare legal

estate point went on at page 466, 'at the bottom of

the page, last paragraph, having set out the various

relevant parts of the legislation, to deal with the
declaration of trust.	And he said:

That instrument did not declare a trust

which was immediately operative on its

execution by DKLR. It provided that
DKLR "will hold the lands listed in

the Schedule hereto upon trust absolutely

for the said" 29 Macquarie, i.e. that

if and when the lands were transferred

to it, it would hold them on trust.	The
instrument itself did not create or declare any trust and no trust arose
until the instrument of transfer was

C2Tl5/l/SR	22	14/9/88
Pendal(2)

executed and delivered to DKLR. Until

then the declaration was no more than

a written offer to act as trustee for

29 Macquarie. The declaration itself

neither created any new rights nor
effected any alteration in any existing

rights; it was simply without legal

operation. In my opinion such an

instrument is not a "declaration of

trust" within the meaning of the

STAMPS ACT and could not have been a

"conveyance" within the meaning of

section 65.

(Continued on page 24)

C2Tl5/2/SR	23	HR SHELLER, QC	14/9/88
Pendal(2)

MR SHELLER (continuing):  Having come to that conclusion,

His Honour, however, went on and dealt with paragraph (2) and came to the conclusion which

is expressed at the top of page 468, that the

instrument did not satisfy that paragraph

even if the first objection that His Honour

took to the inclusion of it as stampable were

overcome. And the~ having gone on and explained

his reasons for that, on page 469, the

second-last paragraph on the page, His Honour said:

In the result therefore, I am of

opinion that the instrument in question

does not fall within par. (2) ..... There is

no question of it falling within pars(l) or (3)

of that heading.

And so he therefore dealt withi the question of

whether it was a deed of any kind.

Now, Your Honours, despite that, when one

comes to page 470, the answers recorded there,

paragraph (c) is answered as "Yes", and, Your Honours

we would think that is an error and it should indeed

be "No" because His Honour seems clearly to have

been of the view that the declaration of trust

did not fall within paragraph (3)(b).

Finally, Your Honours, if I come then to the

judgment of Your Honour Justice Brennan, at the

beginning of the judgment on page 470, Your Honour

said:

The liability to charge of the declaration
..... and of the memorandum of transfer ..... is
to be determined according to the circumstances

which existed at the time of execution of

each instrument and upon exam~nation of the

terms of each instrument from which its legal

operation in or upon othose circumstances is

in general to be gathered -

and Your Honour referred there to HOPKINS' case.

Then, at page 471, dealing with the expression

"to be vested", Your Honour said:

The property "to be vested" is the property

"comprised therein". The phrase "to be

vested" imports futurity, in contrast with
"vested". "Vested" speaks of property
presently vested in the declarant, "to be

vested" speaks of property to be vested in

him in the future.

And then Your Honour referred to a passage in

Sir Owen Dixon's judgment in TOOHEYS' case, and

further down the page said that in your opinion:

C2Tl6/l/JM	24	14/9/88
Pendal(2)

no notion of intention to vest is

imported into par. (2), and no enquiry

into the actual intention of any person

is called for.

Then, Your Honour expressed the conclusion,

at the top of page 472, that:

Construing par. ( 2) in this way, the terms of the instant declaration answer the statutory description and tre instrument is brought to

charge accordingly.

So that Your Honour was of the view that it came

into (2) and;the question then was whether

it came out again, as it were, under (3)(b), and

Your Honour, having dealt with various questions

of the amount of duty, bare legal estate, came,

at page 4 74, at the bottom of the page, to (3)'(b).

Your Honour said:

However, par. (3) under the heading

"Declaration of Trust" in the second

schedule imposes a duty of $6.00 upon

"any such instrument as aforesaid by which

(b) the trusts declared are the same trusts

as those upon or subject to which the

same property was conveyed to the person

declaring the trust by an instrument duly

stamped with ad valorem duty under
this Act ... " The ,declaration made by

D.K.L.R. is, for the reasons given, an

instrument described in par. (2) and it

is therefore "such instrument as aforesaid".

(Continued on page 26)

C2Tl6/l/JM	25	14/9/88
Pendal(2)
MR SHELLER (continuing):

There is some difficulty, however,

in applying par. (3)(b) to an instrument
described in par.(2) as an instrument
declaring a trust of property "to be
vested". Paragraph (3)(b) refers to
the trusts "upon or subject to which the

property was conveyed", and a question

arises as to whether that phrase connotes
only a conveyance which vests property

in a trustee prior to the making by the trustee of an instrument falling within par.(2). If par.(3)(b) applies only to

a declaration of trust made by a trustee

after a conveyance to him of trust

property upon or subject to the trust

ultimately expressed in the declaration,

it could not apply to a declaration that

property to be vested in the trustee shall

be held by him in trust. Moreover, if

par.(3)(b) applies to a declaration that

property to be vested in the trustee

shall be held by him in trust, its

application would be deferred until

the conveyance to the trustee had been

"duly stamped with ad valorem duty".

That would have the consequence of altering

the duty first charged upon the declaration

to $6.00 once the conveyance was stamped with

ad valorem duty. Yet par.(3) is expressed to

apply to "any such instrument as aforesaid",

and therefore to apply to all declarations

falling within par.(2).

And, may I just interpose there, Your Honours, that

that approach in terms of applying to all declarations

falling within paragraph (2) may be more difficult

now in the light of the introduction at the time

relevant to this case of paragraph (b) which deals
with:

Any instrument declaring that any property not identified therein and to be vested .....

shall be held in trust.

So that if it is said that (3) applies to such an

instrument there is a_ problem in understanding what
the same property would be in terms of the

instrument of trust and the conveyance, the

instrument of trust having not identified any

property.

Your Honour then went on to say:

Two constructions are open: either

par.(3)(b) is read literally to apply only

C2Tl7/l/SH	26	14/9/88
Pendal(2)

to declarations confirming the trusts

upon which property has been conveyed

antecedently to the making of the
declaration, or par.(3)(b) applies to

all declarations falling within par.(2)

and relieves them of a charge to ad

valorem duty contingently upon the

conveyance being stamped with ad

valorem duty.	I prefer the latter
construction.	The trusts "upon or

subject to which ... property was conveyed"

are the same trusts as the trusts declared,

and if par.(3)(b) were restricted in its

application to cases where the property

is conveyed before the declaration is

made, it would in practice be restricted

to cases where a declaration made express

a trust that had hitherto been implied or

resulting. But the manifest purpose of

par.(3) is to ensure that when two
instruments are executed in order to convey

property to a trustee and to declare the

terms of a trust, only one of those

necessary to hold that, if the declaration falls within par.(2), it will nevertheless

instruments will attract ad valorem duty.

escape the ad valorem duty charged upon it
under that paragraph if, at the time when it

is stamped, the conveyance has already been

stamped with ad valorem duty. The translation

of a declaration from par.(2) to par.(3) may

therefore occur after it is made and before

it is stamped. Though a variation in duty

after the making of a dutiable instrument

is unusual, the variation is required by

the condition expressed in par.(3)(b) that another instrument, the conveyance, should

be stamped with ad valorem duty. In my

opinion, par.(3)(b) applies to D.K.L.R. 's

declaration if the memorandum of transfer

by 29 Macquarie, which conveyed to D.K.L.R.

the property to be held upon the trust

declared by it, is charged with ad valorem

duty and is stamped accordingly.

Now, Your Honours, that proceeds on the basis, we

would submit, that the conveyance can, at some point,

be stamped with ad valorem duty and that, indeed,

may have been the position in DKLR, but we would

respectfully submit that by force of section 41(4),

the transfer here at page 87 of the appeal book

could never be charged with ad valorem duty because

section 41(4) is plain that a:,

conveyance made in conformity with the

agreement or agreements shall not be chargeable with ad valorem duty, but shall be chargeable with a duty of one

dollar.

C2Tl7/2/SH	27	14/9/88
Pendal(2)

MR SHELLER (continuing):  Your Honours, we respectfully

submit that the preferred view is the view

expressed by the Chief Justice and we would submit

that that view is implicit in the answer given

to question (c) by Your Honour the Chief Justice

when Your Honour held that the declaration did

not fall within paragraph (3)(b). We would submit

that, again with respect, if the view expressed

by Your Honour Justice Brennan about (3)(b) covering

a situation where the conveyance followed the

declaration of trust it would involve some

impingement upon the theory of the Act that

stampability is a matter to be determined at

the point of first execution of the declaration
of trust and it would seem to make certainly
in the current form of the Act otiose provisions
such as are found in the current section 73(2A)(d)

which deals with one particular situation of

a conveyance made to trustees to perform the

trusts created by an instrument on which ad valorem

stamp duty imposed by an Act in force at the
time of its execution has been paid.

A conveyance of that sort, a conveyance which follows upon the document creating the

trust, if it is not made for valuable consideration,

is under 73(2A)(d) chargeable with a duty of $1.

MASON CJ:	Was that provision not in the statute at the
time of DKLR?

MR SHELLER: It was not in the statute at the time of DKLR,

no.

MASON CJ: These alterations or amendments to the statute

on which you rely do not seem to have featured

in the judgment in the Court of Appeal.

MR SHELLER:  No, Your Honour.

MASON CJ:  And I must confess I had not appreciated on

hearing the special leave application that your

argument depended to such a significant extent

on the amendments that have been made since DKLR.

MR SHELLER:  Your Honour, they depend on it not in

substantial principle, because what we would

say is that even without any further amendment the present case is covered by the view of the Chief Justice in DKLR.

MASON CJ:	Yes, I follow that.
MR SHELLER:	Your Honour, as I pointed out on the application,

in the judgment in the Court of Appeal, DKLR

is simply not referred to in this context at all.

C2Tl8/l/ND	28	14/9/88
Pendal(2)

In referring to these other parts, particularly

(2)(b) and this section, it is merely to say

that the construction favoured by Your Honour

Justice Brennan in DKLR is more difficult if

one is looking at the Act in the form that it

was at the time this particular declaration of

trust came to be considered. But fundamentally

what we say is that the correct approach was

the approach taken by the Chief Justice but that

even if the correct approach was the approach

taken by Your Honour Justice Brennan this transfer

could never be stamped with ad valorem duty;

so that that condition of (3)(b) is not satisfied.

So that, Your Honour, we do not really rely

upon the amendment as more than perhaps indicators

that on the state of the legislation that now

comes to be looked at in this case there is a

greater reason perhaps for preferring the view

of the Chief Justice.

DEANE J:  Mr Sheller, on your approach to first

execution, or first signature, what happens if

the document never becomes operative?

(Continued on page 30)

C2Tl8/2/ND	29	14/9/88
Pendal(2)

MR SHELLER:  Your Honour, there are two things that can

happen. The first of those is provided for under

section 26 itself. In the second paragraph:

if the instrument is ineffective by reason

of a failure of the necessary parties to

execute it, a refund may be made of any

money paid for stamping.

So that if only the first party or some of the parties

execute it that seems to provide for the repayment

of the duty paid. Now, Your Honour, if one goes

to the point where all parties execute so that it

becomes operative - - -

DEANE J:  No, take a contract for the sale of land where

all parties execute it but it will not become

operative until exchange?

MR SHELLER: Well, Your Honour, if all parties execute it

then the escape is under - or the repayment is

provided for under regulation - - -

BRENNAN J:  Regulation 30, is it?

MR SHELLER:  I am sorry, Your Honour, yes, thank you. I

should have gone, Your Honour, to section 41(7): In case the agreement is afterwards

rescinded or annulled the ad valorem duty
paid thereon shall be refunded by the

Chief Cormnissioner to the party to the agreement by whom it was paid.

provision found in regulation 30, "allowance for

Then there is a provision for a prescribed form.

spoiled stamps". One of the cases,that is

dealt with there is subregulation (7):

An instrument which, in the opinion of

the Cormnissioner, has failed in its

intended operation and has become useless.

Now, Your Honour, that was the subject of some

discussion in the DKLR case.

DEANE J:  Yes, I notice that. I notice what Mr Justice Mahoney

said in this case. Well, in the case I gave you,

that is, the ordinary contract for sale of land

signed by both parties on the basis of an exchange

but never exchanged so that it never became effective.

MR SHELLER:	Yes, Your Honour.
DEANE J:	Is the only escape by way of regulation and nothing

in the Act at all?

C2Tl9/l/MB	30	14/9/88
Pendal(2)

MR SHELLER:  Your Honour, there is a second proviso in 26

which I did not read, perhaps I should have, that:

a contract made by acceptance of an offer

contained in any instrument shall be

deemed first executed when the offer is

accepted.

So, Your Honour, in the particular case there

described of "a contract made acceptance of an offer" -

however, Your Honour, I think the answer to what

Your Honour says is that if in the particular situation if all parties have executed but there

has been no exchange, in that interregnum, the

saving is under regulation 30.

(Continued on page 32)

C2Tl9/2/MB	31	14/9/88
Pendal(2)

DEANE J:	But that does not help you much if one is
concerned with the interpretation of the Act, does
it,to point to a regulation?
MR SHELLER:	No, I appreciate that.

DEANE J: While I am interrupting you. Would it follow from

what you are saying, that the ordinary conveyancing

practice in New South Wales, whereby contracts

and transfers are executed undated and the solicitor

subsequently inserts the date under implied

instructions from his client, simply does not fit

into this and that, in effect, duty has been

avoided or evaded or penalties every time, in

those circumstances documents are submitted for

stamping without it being disclosed that the date

is not the date of signature?

MR SHELLER: 

And, of course, subject to the six month period

within which, Your Honour, and the two month
period. But, yes, Your Honour, we would submit,

that the instrument is chargeable from the point of

time when a party thereto signs it.

DEANE J: And what about a second draft which is signed?

MR SHELLER:	Your Honour, if - - -
DEANE J:	When the first has never become effective?
MR SHELLER:	- - - if the first has never become effective -
Your Honour meant that the first one is signed

by all parties but not exchanged?

DEANE J: Yes.

MR SHELLER:  Then, Your Honour, again it would fall back on

regulation 30.

DEANE J:  I see. I am not suggesting it is an obstacle or

anything but it does seem desirable that we understand	the consequences of the approach that the Conrrnissioner
has taken.

MR SHELLER:  Your Honour, there is a history on this, which

it may be desirable that I give Your Honours. There is

a reference in the iud~mPut in the Court of Appeal

to a case of EX PARTE BURROWS, (1906) 6 SR(NSW) 606,

and Your Honours, it was on our list of cases merely

to be referred to. And the two members of the

Full Court in a case where:

A deed of conveyance was signed

by the assignee in December, 1905, and

by the assignor in March, 1906. The

conveyance was tendered to the conrrnissioner,

C2T20/l/SR	32	14/9/88
Penda1(2)

with the stamp duty, in March, 1906,

for the purpose of being stamped. The

commissioner refused to stamp the

instrument without payment of a fine on

the ground that more than two months

had elapsed since it was first executed.

Held, that the conveyance was "first

executed" within the meaning of

section 17 ..... when it was signed by

the assignor.

And the two judgments are short and to that effect

on the basis that there was no conveyance until

the document had been signed by the assignor. Now,

Your Honours, subsequent to that an amendment was

made to the Act, the Act there being the STAMP DUTIES

(AMENDMENT) ACT 1904, and Your Honours that amendment

is found in the STAMP DUTIES (AMENDMENT) ACT 1914,

section 4(2). And that provided that:

(Continued on page 34)

C2T20/2/SR	33	14/9/88
Pendal(2)

MR SHELLER (continuing):

For the purposes of the Principal

Act, and any Act amending it, an

instrument is deemed to be first
executed the first time that it is

signed and sealed, or signed (as the

case may be) by any party thereto.

In other words, that was the forerunner of

the current section 26. So that, Your Honours,

it seems that the legislature in effect took

account of the view that was expressed in

BURROWS and dealt with it expressly in 1914.

Your Honours, we would respectfully submit

that the decision of this Court that paragraph (3)(b)

did not apply to the declaration of trust -

decision of this Court in DKLR did not apply

to the declaration of trust in that case -

applies for the same reasons in the present case,

that the time sequence is the first execution

of the declaration of trust followed by the

transfer so that it cannot be said at the point

of declaration that the property was conveyed,

or alternatively that the instrument of

conveyance was not stamped with ad valorem duty,

that those were matters to which the Court of

Appeal made no reference, and the passage that I referred Your Honours to at page 134, the first

sentence in that paragraph is, with the greatest

respect, simply not correct, that section (3)(b),

as appears from its language, is intended to

relieve from ad valorem duty in cases where at

the time of the declaration the property has

been conveyed by an instrument duly stamped

with ad valorem duty, and that the situation
where the declaration of trust ~recedes the
instrument of conveyance, if it is taken up, 1s

taken up in the Act by reference to the

chargeability of the instrument of transfer itself

in other sections, and we gave Your Honours the

example of section 73(2A)(d).

It is for those reasons, Your Honours, that

we submit that the appeal should be upheld.

DAWSON J:  The result is that duty is payable on the

original agreement and on the declaration?

MR SHELLER:  Yes, Your Honour, on the sale agreement as such,

and as a declaration of trust.

DAWSON J:  But the transfer is relieved of duty because

of the duty on the declaration?

C2T21/l/HS	34	14/9/88
Pendal(2)

MR SHELLER:  Yes. The transfer is relieved of duty,

Your Honour, because the instrument, the

conveyance - I am sorry, Your Honour - the

agreement for sale is charged under section 41(1).

So the consequence is, so far as the transfer
is concerned, that it is relieved under

section 41(4).

DAWSON J:  Is not the result that duty is paid twice where

the intention would seem to be that it is only

paid once?

MR SHELLER:  Your Honour, the result is that it treats

the share sale deed as dealing with two

distinct matters, under section 17,

on the one hand an agreement for sale, on the

other a declaration of trust.

(Continued on page 36)

C2T21/2/HS	35	14/9/88
Pendal(2)

DAWSON J: Yes.

MASON CJ:	Yes, Mr Sheller.
MR SHELLER:	Your Honour, it is for those reasons that

we submit that the appeal should be upheld.

MASON CJ:	Mr Sheller, would it be convenient for you
to present at this stage, by way of answer to
what we know is a contention put by your opponents,
your argument against the matter falling within
paragraph (1) of declaration of trust?

MR SHELLER:  Yes, Your Honour, certainly. Your Honours,

that is dealt with in notice of contention 4 at

page 145. Your Honours,the first point that

we make about that is that there is a marked

contrast between (1) and (2)(a) in that (1)

speaks of:

Any instrument declaring that a person

in whom property is vested as the

apparent purchaser thereof holds the

same -

the contrast there being between a situation where

at the time of declaration the property is vested,

rather than an instrument relating to property

to be vested; the contrast being the one that

was picked up from what was said by Sir Owen Dixon

in TOOHEYS' case and repeated in DKLR.

Now, Your Honours, in this case the Court of Appeal,

rightly, we would submit, treated this as a "to be

vested" case and, we would submit, that

the property here is not vested until such time as

the transfer is completed by registration. Your Honours,

for that- may I just make reference, without taking

Your Honours necessarily to the passages, to the

4th edition of Gower on Modern Company law at page 456, and,

Your Honours, the 4th edition of Ford's Principles of

Company Law, paragraph 1143. Your Honours, I have

photostat copies of the relevant parts; may I hand

those up? The first, Your Honours, is Gower, and

the second is the relevant passages from Ford.

MASON CJ:	Thank you.
MR SHELLER:	We submit, Your Honours, that at the time of

declaration if the correct view be, as we submit,

that one looks at it at the time that the

document is signed by Pendal Nominees the shares
were not vested, but even if one were to look at it

at the point of time when the exchange of parts took place, the shares were not vested but fell within the description "to be vested", which is found, by way of contrast, in (2).

C2T22/1/JM	36	14/9/88
Pendal(2)

DEANE J: That obviously has great force but is it a

special situation where the document declaring

that the property is held on trust is the document

pursuant to which the vesting takes place? I

mean, say for example the vesting was to be by

simple delivery; if a document were executed saying "This property is to be delivered to X by way of trustee' and then the delivery took

place, it is not quite so clear that you could

not say that the property, speaking in relevant

time terms, is vested in the person to whom delivery

is made as trustee. It seems to me it may be

a special problem within the general context

of what you are putting.

MR SHELLER:  Your Honour, if I could put a number of matters

to that. Firstly, we would respectfully submit
that that is against the language used in the
sense that it talks in terms of "vested" but,
secondly, Your Honour, that if one is looking

at events which in a sense take place at the

same instant, or at about the same instant, in

point of law one proceeds on the basis that an

event precedes its effect. So that if one is

looking at a document which answers the description

of an instrument declaring but that part of the

effect of that document is that in due course

something will happen, such as the property will

be transferred, which is this case, then in point

of law the sequence i~ first of ali the declaration

and then, secondly, the transfer.

And, Your Honours, we seek to get support

for that proposition from what was said in this

Court in ROBERTSON V FEDERAL COMMISSIONER OF

TAXATION, 86 CLR 463. And Your Honours will

recall that that was a case where the articles

of a company operated in a way t~ effect the

question whether the shares could be listed at

the point of death but if I could just take

Your Honours to a passage that appears in the
judgment of Justice Kitto at page 485.	At the

bottom of the page he has referred to a judgment

of Chief Baron Palles in RE AUGUSTA MAGAN and

just beyond half-way down that page, quoting

from that judgment:

The two events - death and the passing of

property - took place in point of time,

at the moment; but innature one preceded

the other. The passing of the property

was the effect of the death; the death was

the event upon which it passed, and in nature

the event must precede the effect which

is to ensue upon it.

And then, a bit further down, quoting from the same judgment after a reference to COKE,

His Lordship had said:

C2T23/l/ND	37	14/9/88
Pendal(2)
MR SHELLER (continuing):

"Considering the instant of the death of

Miss Magan upon this principle, the instant so far as it was an end of her life must

precede in contemplation of law the same

instant so far as it was the time at which

the estate passed on her death.

Now, Your Honours, we would submit here that if

one goes to the share sale deed at page 33 of the appeal book, the agreement is one to sell and buy

in clause 1.1 and then the obligation under 1.4

at page 36 is on completion to deliver transfers

in favour of Pendal Nominees so that we would

respectfully submit that quite apart from what

we say is the actual time sequence here there is
a sequence that flows in point of law from the

sequence of agreement an obligation to deliver

a transfer and then following, we would submit,

on that, vesting. So that what we would submit

to Your Honours is that on any view, whether one

takes the view that one must look at this at the

point when Pendal Nominees executed the share sale

deed or whether one looks at it at the point of

time when the parts were exchanged, the property

was not vested and, for that reason, paragraph (1)

cannot apply. It was, in other words, to adopt

the language of Sir Owen Dixon in TOOHEY's case,
a trust of property not then vested but in advance

of vesting.

Now, Your Honours, secondly in regard to

paragraph (1) we say that Pendal Nominees is not

or was not the apparent purchaser. We submit that

there is no document in which Pendal Nominees is

shown as apparent purchaser. At ~ost, there is

the transfer which is equivocal and if Your Honours

go to page 87, Your Honours will see at about

line 7 or 8 that Pendal Nominees is shown as

full name of transferee and then is has "Buyer"

in brackets underneath and Your Honours, what

we would respectfully submit this paragraph is

looking at is that class of case where one has
a document which shows a stranger to the purchaser

as the purchaser, the purchaser meaning thereby

the person who has bought and given consideration.

DEANE J: Except if you look at that document with the

consideration stated, it is not a great gap or a

jump to say that Pendal Nominees is the apparent

purchaser for $7 million of the 750,000 shares.

MR SHELLER: Well, except for this, Your Honour: that, of

course, it is perfectly consistent with what, in

fact, happened.

C2T24/l/SH	38	14/9/88
Pendal(2)

DEANE J: But that will nearly always be the case, will

it not?

MR SHELLER: Well, no -

DEANE J:	When you have an apparent purchaser?
MR SHELLER:	Yes, but it must be apparent, we say, from

the face of some document.

DEANE J: But, Mr Sheller, that would mean that the section

would only apply if the document stated a mistruth.

That is, if it said, taking this document,

consideration $7,900,000 paid by Pendal Nominees.

(Continued on page 40)

C2T24/2/SH	39	14/9/88
Pendal(2)

MR SHELLER:  Your Honour, if it said name and transferee

was struck out and buyer was put there.

DEANE J:	But take the ordinary real property conveyance.
It says "transferor", "transferee" consideration.
MR SHELLER:	But, Your Honour, the trouble with this is that

this tends to have what I would submit is an

uneasy relationship with the resulting trust

where one has a purchaser who in the contract

may or may not be the person who 1:1.as pa id the

purchase price in the sense that it is money

that he has provided.

Now, Your Honour, it may be on the one hand

that A on the contract is shown as the purchaser

and he purchases from B, but in fact X has provided
the purchase money and is indeed the person

where A is indeed the purchaser but there is a

in favour of whom there is a resulting trust.

direction in the contract that it be transferred

to X. Now, Your Honour, if one is considering

whether there is or is not a resulting trust,

those are all matters that may be taken into

consideration. Here one is required simply,

apparently, to look at something and see if there

is an apparent purchaser.

We would say that if one looks at the transfer

it is equivocal. If one looks at the share sale

deed it is quite clear that Pendal Nominees is

not the apparent purchaser. The Act may or

may not have been intended to cover the same ground

as a resulting trust, but that is not really

quite what it says. It says that what one has to

do is find an apparent purchaser, and we would

submit that it may be that in the first of the

two illustrations that I suggested, namely that

A is a stranger to the person who has provided

the purchase price, that there there is truly

an apparent purchaser who satisfies the language
of paragraph (1), but in the absence of that

paragraph (1) is not satisfied.

BRENNAN J:  Mr Sheller, is the consequence of that this,

that if A is the purchaser named as such in a

contract of sale and takes a conveyance and the
purchase price has been provided by Band
subsequently A declares himself to be trustee for

B, that the total amount of duty for which any party may be liable is the ad valorem duty on

the original contract of sale or on the transfer,

plus $6?

MR SHELLER:  Yes, Your Honour.

C2T25/l/HS	40	14/9/88
Pendal(2)

BRENNAN J:	Whereas if in the original contract there is to be as transfer from the vendor to a nominee, in other words, to A, though the purchase price
is paid by B, on  your argument, am I right
in thinking, that there would be double ad valorem
duty?
MR SHELLER:	There would be ad valorem duty on the

declaration of trust - - -

BRENNAN J:	Yes.
MR SHELLER:	as well as on the - yes, Your Honour.
BRENNAN J:	It seems to raise an anomaly in practice.

It may be quite right, of course.

MR SHELLER:  The problem with it is, Your Honour, that

it is saying in that case - one is asking the

question which of the two documents shows the

stranger as an apparent purchaser, as distinct

from an ordinary situation where properties,

shares, may be transferred to a trustee registered

in the share register of the company simply in
the name of that trustee. Now, in that case,

we would submit, the trustee is not holding it

on a resulting trust. He is holding it on an

express trust, and one cannot, as it were, say

"Just because he appears as transferee", or,

"Just because he appears in the share register,

that this paragraph applies".

Again here, of course, we know that there

1s - or it is part of our submission, at any

rate, that there is an express trust. There

is not a resulting trust which is an implied

trust. There is an express trust, and when I

said to Your Honour Justice Deape that this is

consistent with the true position, what I meant

was that the true position here is that this

property is transferred to Pendal Nominees under an

express trust. It is not conveyed to it under an

implied trust. There is no resulting trust, so

that if paragraph (1) is intended to pick up the

sort of resulting trust which Your Honour

suggested, this is not such a case.

MASON CJ:	Mr Sheller, does a recourse to legislative history in New South Wales or elsewhere throw
any light on this notion of apparent purchaser?

C2T25/2/HS	41	14/9/88
Pendal(2)

MR SHELLER:  Your Honour, I think I am correct in saying

that this has been in the form it is since the

Act was introduced.	The answer is, Your Honour,
that I am not aware of it.	I will think about

that over the adjournment, if I may, Your Honour.

MASON CJ:	Yes, thank you, Mr Sheller.
MR SHELLER:	So that we would submit,so far as paragraph (1)

is concerned, that firstly shares were not vested

at the time of declaration and, secondly, that

the Pendal Nominees is not the apparent purchaser

by any document and, thirdly, if the embrace of

the paragraph is that of a resulting trust, this

is not a case of a resulting trust but a transfer

in terms of an express trust. So we would respectfully

submit that the Court of Appeal was correct in

concluding that the declaration of trust is not

covered by paragraph (1). Those are my submissions

on that contention, Your Honours.

MASON CJ:	Yes, thank you, Mr Sheller. Yes, Mr Hill.
MR HILL:	Your Honours, might I first hand up copies of

our outline of submissions?

MASON CJ:  Yes, thank you. Yes, Mr Hill.

MR HILL:  Your Honours, might I start at part B of our

submissions and deal with the matters, firstly,

that my learned friend has addressed Your Honours

on, that is to say, on the assumption that the
share sale agreement contains within it a separate

dutiable matter which is a declaration of trust

within the meaning of the schedule. Your Honours,

if I might ask Your Honours to turn to the second

schedule charge declaration of trust. In our
submission, when one examines it carefully one

sees that it demonstrates a legislative intention

that, in principle, duty is not to be charged

twice. If I might just take Your Honours through

it paragraph by paragraph.

Firstly, starting with paragraph (1) , which clear+y, even on

my learned friends submissions covers the resulting

trust area - we say it covers this case as well -

the legislature has taken the view that if the

property has as it were got into the hands of the

trustee by virtue of some transaction, presumably

ordinarily on which duty would be payable, that when

the apparent purchaser makes a declaration that that
property is to be held in trust for someone else,

whom in other sections the legislature calls the

real purchaser, though that is not a matter dealt

with specifically in that item, though it casts some

l:i,ght by what is meant by the words "apparent purchaser" -

it is :in that sort of case where, :in the ord:inary case anyhow,

duty will have first been paid, but the legislature grants an exemption from the ad valorem duty and :instead imposes a fixed

rate of duty.

C2T26/l/MB 42 14/9/88

MR HILL (continuing): If one comes then to the paragraphs

in (3)(a), each of those paragraphs is likewise

concerned with the avoidance of double taxing.

One starts with (a) which applies to exempt a

case where the instrument of declaration is one

by which:

the same trusts are declared as have been

declared in respect of the same property by

an instrument duly stamped with ad valorem

duty under this Act.

Clearly, there is a case where there is a prior instrument which will have been duly stamped with

ad valorem duty, in this case, of course, a prior

declaration of trust.

Paragraph (b), similarly, deals with a case

where there has been a prior ad valorem duty paid. It

deals with the case where:

the trusts declared are the same trusts as
those upon or subject to which the same

property was conveyed ..... by an instrument

duly stamped with ad valorem duty under this Act.

There, again, the duty has been paid on the instrument of

conveyance, so that the legislature has regarded it

as appropriate that the duty not be chargeable

upon the declaration of trust.

The final case,which is dealt with in (c), not, of course, a case involving stamp duty but

this time a case involving death·duty, or since

its abolition, of course, the exemption from

death duty, where:

the same trusts are declared as have been declared by a will in respect of the same

property and -

in effect

death duty ..... has been paid -

or it is exempt. The section has changed tts form

since the abolition of death duty, but the principle

was, of course, that if death duty had been paid,

a second lot of duty would not become payable
on the declaration of trust. It is interesting

just looking at that last exemption, because it

is. relevant to the way one goes about construing

the other paragraphs, to consider a case where,
for some reason - it does not matter what the reason
might be - the trustee of the estate is pushed into

executing a document which declares the trusts at

a .time when the Commissioner has not yet managed to

get around to assessing death duty, for some reason

or other - perhaps there were complications in the

C2T27/l/JM	43	14/9/88
Pendal(2

estate. As we understand the way the Commissioner's

argument would run, the fact that he had not made

the assessment prior to the time of declaration so that the death duty had not been paid at the

very moment of time of signing, that would remove

altogether the benefit of that exemption (3)(c).

(Continued on page 45)

C2T27/2/JM	44	14/9/88
Pendal(2)

MR HILL (continuing): That is really the consequence of

the Commissioner's argument in this case. It

may well be that that is a consequence that follows

but it would be a very strange legislative policy

if that was the policy which the legislature

had decided to adopt.

What the Commissioner is seeking to do in

this case, in essence, is to limit the exemptions

both in paragraph (1) and in paragraph (3)(b).

But might I just concentrate for a moment on

paragraph (1). He seeks to limit it really,
firstly by saying that the property has to be

vested at the time the instrument is first signed,

irrespective of its effectiveness, irrespective

of the effect which the instrument is designed

to produce because as a matter of law, not

necessarily a matter of stamp duty law, quite

clearly that declaration of trust can have no

effect at all until the trust property is, in
effect, vested in the trustee.

So on any view of the matter, whether one

is talking about stamp duty operating from the

moment the document is signed, but adopting

Sir Owen Dickson's test of saying, "But one

considers its liability having regard to the

legal effect it is capable of having", if that

is the right test to adopt, the legal effect

which the declaration here is capable of having
has to be seen at the point of time at which

the trust will take effect, that is to say,

when the trust property will be vested in the

trustee.

If, contrary to that view, the proper approach

is to say the instrument only becomes liable

when the instrument meets the sta~utory description -

and I will come back to these arguments later -

the same result follows because at that point

of time one has the situation eo instanti that

the share agreement was settled and the property,

unless one takes a very very narrow view of the

word "vested"-and my learned friend is seeking

to do so, of course, by saying "Well, look, there

can be no vesting in the relevant statutory sense

even if, for example, the trustee had the entire

equitable interest in him, the shares would still

be not legally vested until registration of transfer".

That, of course, produces a most peculiar consequence

if one thinks about. Take the ordinary case - - -

C2T28/l/ND	45	14/9/88
Pendal(2)

DEANE J: Except the word ''actually" is a bit of a problem

for you, is not it?

MR HILL: "Actually paid the purchase price?

DEANE J: Yes, in that on your approach, and adopting

Sir Owen Dixon's understanding, you would not know

whether duty was payable under (1) at the time

the document was first executed because it does not

refer to what the document says. It says the:

persons who have actually paid the

purchase money.

MR HILL: That is so, except that the document itself refers

to the purchase money being paid. Of course if

it is looking to a matter of fact, and one goes outside
the document, in our submission, the proper way
of looking at the matter is ultimately to see,
at the time the document is to be stamped or is

being stamped, whether the exemption, if I may call

paragraph (1) an exemption, is satisfied.

DEANE J:	I was being obscure - - -
MR HILL:	No, I know what Your Honour said. Your Honour was
saying that looking at the matter at the point of
time of execution, no one will have paid anything.
DEANE J:	No, looking at the words you used, the reference to
"actually paid the purchase price", supports Mr Sheller's approach to "is vested"?
MR HILL:	If the matter is to be looked at purely and
simply at the point of time of execution and no
other time, in our submission, and I will take
Your Honours to various sections which quite
clearly suggest that cannot be the legislative scheme
as regards exemption, but perhaps the obvious one
for the present is the one I have already mentioned,
by just looking at paragraph (c), where at the time
of declaration death duty is still in the course of
assessment and is paid the day after, would it
really be the legislative polic~ if one was able to prove that the death duty had been paid at that time, that the exemption did not apply.

Your Honour Justice Deane in a question to my

learned friend earlier, posed the matter in a

different context and perhaps it is worth just looking

at it here. ILYour Honours goes to section 41(4)

the matter Your Honour raised with my learned friend

was of the case of the agreement for sale and transfer

being signed and lodged, as it were, for stamp duty

at the same time, both being at a time prior to the

instruments becoming effective.

C2T29/l/SR	46	14/9/88
Pendal(2)

1:1R HILL (continuing): If Your Honour goes to section 41(4)

which, of course, is an exempting provision as
well, it provides that:

Where duty has been duly paid in conformity

with the foregoing provisions -

that is to say, on the contract -

the conveyance made in conformity with

the agreement or agreements shall not

be chargeable with ad valorem duty -

Now, if one was looking at that matter at the time

of first signing, the end result is that, at that

time, if both documents are signed together, both

the agreement and the transfer will be liable for

ad valorem duty because, at the time of signing

of the transfer, the agreement will not have been

duly stamped. The logical consequence of my

learned friend's arguments is that in such a case

contrary to the conveyancing practice of New South

Wales and certainly such as to give heart attacks,

I am sure, to most solicitors, that both the two

documents would be liable.

The alternative way of construing these

provisions and, we would submit, the correct way
is to look at the matter on the basis that innnediately
the contract has been stamped, the conveyance is

relieved from ad valorem duty and, if one construes

the Act - and there are many other sections and I will

take Your Honours through them later that are in

that same position -unless one construes the Act

that way, there are the most peculiar consequences

of double taxation which one cannot imagine the

legislature intended or contemplated. It would be
to produce a most capricious resuit in the operation

of the legislation.

If I might now go back to paragraph (1) and deal

with it in more detail. That paragraph, as a matter of history as my learned friend said to Your Honours

a few moments ago, has been in the legislation since

1920.      Our researches have been unable to ascertain

where it came from. it certainly did not come from

the United Kingdom as most of our legislation did

and it does not seem to have a parallel in other

jurisdictions that we have been able to ascertain.

(Continued on page 48)

C2T30/l/SH	47·	MR HILL, QC	14/9/88.
Pendal (2)

MR HILL (continuing):  The reason, I suppose, why there

is no such parallel is because the New South Wales

Act did not adopt the United Kingdom pattern of voluntary conveyances, deeds of gifts and settlements, as is basically the case in most

other States. So New South Wales proceeded on a

slightly different basis so far as declarations

of trust are concerned. It is certainly true as

a matter of history that paragraph (2) in 1920,

when paragraph (1) was enacted, was a paragraph

that read, as we have said in our submissions:

Any instrument declaring that the

property vested in the person

executing the same is, or shall be,
held in trust for the person or

persons mentioned therein.

The words II to be ves ted 11 and the other comp 1 ica t ions

which were considered by this Court in DKLR were
words which were added in 1931, as, for that matter,

were paragraphs (1), (2) and (3). There is

nothing in the second reading speeches to which

in New South Wales we too are, as in the

Commonwealth legislation required to at least

look at, but there is nothing there which gives

any assistance at all as to what the legislature

was seeking to do in 1931, so that that source

of assistance is not available to us, nor is

there anything in 1920 when paragraph (1) was

inserted that gave us any assistance, either

side any assistance.

All that is certainly cl~ar about the words

of pa~agraph (1) is that they are directed at

a case involving resulting trusts, whether that 1s

their sole operation or not, but that certainly

is fairly clear from the wording. One has to I

II II

then construe the words apparent purchaser .

One has to decide what they mean.	If Your Honours
were to turn to section 73 of the Act, which is

a section that has exemptions from conveyance

duty, those exemptions being repeated under the

second schedule charge conveyance - I will

not take Your Honours to both, they are

virtually identical for present purposes -

(Continued on page 49)

C2T31/l/HS	48	14/9/88
Pendal(2)

MR HILL (continuing):  Your Honours will see that

paragraph (e) of the exemption - and that
paragraph has been in the Act at least since

1931:

A conveyance whereby the apparent

purchaser of property that is vested in

him upon trust for the person who was the

real purchaser and who has actually paid

the purchase money therefor, conveys the

same to the real purchaser.

Now that gives us some clue, perhaps in the juxtaposition of apparent purchaser and real

purchaser,what the legislature was concerned

with. It was not, in our submission, concerned

with the sort of matters that my learned friend
put to Your Honours, namely that somehow or other
one has to find in the document of purchase the
words "as purchasers" or matters of that kind

because if that was so, if the only purchaser

who was within the class of apparent purchasers
was the person who was named as the buyer in a contract, so the word "purchaser" had that

sort of meaning, then what would "real purchaser"

mean.

Presumably, there could never be such a

person in my learned friend's submision unless

the word "purchaser" had different meanings in

both expressions. The two expressions are,

essentially, in our submission, composite expressions

and they are reflecting, to some extent, the

general language of trust law that one finds

in the resulting trust cases. And we have given

Your Honours a reference to one them in this

Court which I will come back to in a second -

CHARLES MARSHALL's case.

So that the word "purchaser" cannot have

that connotation. It must mean something else.

And, in our submission, all that the words

" apparent pure aser mean 1n t 1s context are h " . h'

the person in whose name title is taken. That
is the context in which one would use those words
in the law of resulting trusts rather than that

one looks at the language of the instrument.

The consequence of my learned friend's

interpretation, if one slightly changed the facts

around here, would be to produce three lots of

tax. No doubt that is something that the

Commissioner might like to see but if one imagined

the facts of this present case and for some reason

immediately after having signed these docurnets and imnediately
after the canpletion, Pendal transferred the shares back to
the BA - and might I just look at the matter as it was before

any amendments of more recent times just to test the point.

C2T32/l/ND	49	14/9/88
Pendal(2)

MR HILL (continuing):  According to my learned friend

the declaration of trust is liable to stamp duty

because, among other things anyhow, Pendal is not

the apparent purchaser. If that is so when the

shares were to be retransferred back to the

beneficial owner the exemption in 73(1)(e) must

similarly have no application if the words "apparent

purchaser" - which is one of my friend's submissions -

is not appropriate to this case. We would say it

clearly is appropriate to this case and 73(1)(e)

would achieve the obvious exemption which the
legislature intended of exempting a conveyance

where the apparent purchaser of property that is

vested in him upon trust, actually paid the purchase

money, conveys the same to the real purchaser.

Now, here my learned friends say, S'Otto voce,

"But what about paragraph (b)?", to which I would

say, "Well, what about paragraph (b)?", because

on my learned friend's arguments it would have no

application either unless stamp duty had been paid

at the time of execution because you have to look

at the matter back at the time the document is

signed. So the end result is that my learned

friend's submissions would be duty was payable

on the acquisition, duty was payable on the

declaration and duty was payable on the transfer
back, unless in the meantime there had been the
intervention of payment of duty before the
signature by some party to the document.

In my submission that sort of consequence is

something that one has to very carefully consider

in judging whether or not my lea~ned friend's

submissions are to be accepted.

We have not been able to find any case that

uses the actual expression "appare\l,t purchaser".

There may well be but certainly our searches have

not found a case where the composite expression	"apparent purchaser" was used. If I might just	take Your Honours to CHARLES MARSHALL PTY LTD V
GRINSLEY, just by way of illustration of the
sort of language used not only in this Court but also in other courts in the resulting trust
advancement area. It is in (1956) 95 CLR 353.
The relevant passage in the joint judgment of Sir Owen Dixon and Justices McTiernan, Williams,
Fullagar and Taylor, is just by way of illustration
of the sort of language which is used all over
in this area.

C2T33/l/MB	50	14/9/88
Pendal(2)

MR HILL (continuing): At page 364, Their Honours say,

dealing with an argument about advancement, firstly:

if the purchaser is the father of or a

person in loco parentis ..... the

presumption arises from the relationship.

It goes back to SIDMOUTH V SIDMOUTH, where

Lord Langdale, again dealing with advancements:

The law applicable to cases of this

nature is subject to so little doubt

that it has not been questioned ..... Where

property is purchased by a parent in

the name of his child.

Now pausing there, that is the sort of language,

in our submission, that we are really talking about,
forgetting the advancement side of the matter because

that is, of course, what goes to counteract the

resulting trust or made:

the purchase is prima facie to be

deemed an advancement; the resulting

or implied trust which arises in
favour of the person who pays the

purchase-money, and takes a

conveyance or transfer in the name of
a stranger, does not arise in the

case of a purchase by a parent in the

name of a child.

Now, one really does not need to go far into that

and also in what was said by, for example, the

House of Lords in SHEPHARD V CARTWRIGHT and

Viscount Simonds, to see that the sort of language

that is being used always by equity lawyers is
the language of talking about purchases, when

one is talking about the person who pays the

purchase-money and,of course, the person who

ultimately is the beneficiary of the resulting
trust is the person who pays the money,	the other
person being the resulting trustee.

In our submission, the legislature should not

be taken by extending paragraph (2) to cover
"to be vested cases" in 1931, to have intended to

bring about a rather bizarre result that declarations

in resulting trust situations made in advance of

vesting can never be exempt from ad valorem duty,

notwithstanding that the duty will have been paid

when the trustee acquires the property, but that as

long as the declaration is made at the very last

moment of time, then the exemption will be available.

C2T34/l/SR	51	14/9/88
Pendal(2)

MR HILL (continuing): If Your Honours put that in the

context of ordinary commercial transactions

involving real property land:  X purchases -

X contracts to purchase - to be neutral about it -

real property land; the money is supplied by Y.

It happens, no doubt, every day of the week.

According to my learned friend's submission,

presumably the parties would have to wait until

the register had been concluded, so that the

documents had not only been signed,· lodged with the

Land Titles Office, but actually registered by

the Registrar General - that could be a period

of up to six months in New South Wales - or

used to be - before they could execute a declaration of

trust without paying stamp duty. It may be that

that is the result that the legislature intended.

Certainly, commercially, one would imagine that

the usual case would be that the beneficiary

would wish to see, at least at the latest by the

time he has paid over his money, that there

is a declaration. And yet, in all those situations,

if my learned friend's submissions are right, the

declaration must be liable to ad valorem duty

and that must be the presumed intention of the

legislature.

The other way of reading it, and we would

say the correct way of reading it is to see

whether,at the time that the document comes to be

lodged for stamping, it meets the statutory

exemption. That is to say that the property,

being shares or land, is vested in the trustee

who holds it upon trust for the person who has

actually paid the purchase money and that each

of them fall within the concepts·of apparent or

real purchasers.

Your Honours, the general question of the point of time at which stamp duty ,is payable is

far from a simple one and it is not, in our

submission, quite so simple to go to section 38

of the Act and say, "Well, that says that the

ability to recover duty from a party arises at

the time of first execution", and to proceed from
that that the scheme of the Act is to tax instruments

at the time of first execution.

(Continued on page 53)

C2T35/l/JM	52	14/9/88
Pendal(2)

MR HILL (continuing): It is a matter that was considered by the Full Supreme Court of South Australia in a case, SUPERANNUATION FUND INVESTMENT TRUST V

COMMISSIONER OF STAMPS, (1980) 47 FLR 14. That

case arose following the decision of this Court

in the first SUPERANNUATION FUND INVESTMENT TRUST

case where it had been held that the SUPERANNUATION

FUND ACT, as it then stood_-SUPERANNUATION ACT, I

should say -brought about the result that the trust

was liable to stamp duty and the Commonwealth stepped

in and made some amendments to the SUPERANNUATION ACT

which sought to avoid the result for the future.

However, what had happened in one of the

factual circumstances with which the SUPERANNUATION
FUND INVESTMENT TRUST case was concerned was that

not only was the trust liable, but for the exemption, to stamp duty but so also was another party and the question that, therefore, arose was whether stamp

duty was nevertheless payable, even if it could not

be recovered from the trust, whether it could be

recovered from some other party and that argument

turned upon section 114 of the CONSTITUTION. Without

wanting to go into that issue greatly, it depended

upon whether the instrument was or was not property

of the Commonwealth Cbvernment, being the

Superannuation Fund Investment Trust and, if so,

whether it was a tax upon that property and a

majority of the court were of the view that it considered an argument based upon the personal liability of a party to stamp duty in the
was but that is irrelevant to this particular point.

South Australian Act. As Your Honours would, no

doubt, recall, traditionally stamp duty has not

been the subject of a personal liability. It is

legislation which, in its traditional form, really,

only said if stamping did not take place then the

instrument could not be available or given in

evidence, something that is found in the New South

Wales' Act in section 29.

(Continued on page 54)

C2T36/l/SH	53	14/9/88
Pendal(2)

MR HILL (continuing): But, in some States, and that includes

New South Wales and South Australia, a personal

liability for stamp duty was introduced and the

Chief Justice was considering that matter at

page 17 and says of the South Australian Act

around about point 6:

The duty was a tax upon the instrument

itself and its burden, subject, of course,

to any contratual arrangements, fell upon
the person who had the need to make use

of the instrument. In 1915 the South Australian

legislature, by i'nserting sub-s (2) of s 5 -

that is set out later but it is the section which

provides for personal liability -

imposed a personal liability upon ''every
party who executes such instrument" by

providing that the duty "shall be a debt due to Her Majesty" from every executing

party. This subsection creates an additional
remedy for the State. It does not, however,

in my opinion, change the essential character

of the duty as a tax upon the instrument.
The debt which sub-s (2) creates merely
gives to the State a further means of recovery

of the duty -

We would say the same would be true of section 38 -

which is levied primarily upon the

instrument itself, in the event that the
duty has not been paid by a person seeking
to use the instrument. It seems to me that
the tax remains a tax on the instrument

and the primary burden falls on the person

who relies upon the instrument for his legal

rights, and must therefore m?ke use of it

for legal purposes.

It seems to me, moreover, that the

as a "conveyance or transfer" as appears

duty on a memorandum of transfer becomes
chargeable at the point at which the instrument

becomes the property of the transferee.

from the Second Schedule to the Act. The

instrument becomes effective as a conveyance

or transfer when it is delivered to the

transferee for use as a transfer. I do

not think that the mere signing of a document

in preparation for use attracts liability

for stamp duty. The document is not chargeable

with stamp duty until it becomes an instrument

which is legally effective to affect legal

rights.

C2T3 7 / 1 /ND .	54	14/9/88
Pendal(2)

And, of course, that was not	a comment on the
New South Wales Act although	much that is said
there is, in our submission,	relevant to the
New South Wales legislation.	I notice it is
just after - - -

MASON CJ:  Yes, we will adjourn until 2.15, Mr Hill.

AT 12.45 PM LUNCHEON ADJOURNMENT

C2T37/2/ND	55	14/9/88
Pendal(2)

UPON RESUMING AT 2.16 PM:

MASON CJ: Yes, Mr Hill.

MR HILL:  Your Honours, I was just going to go on with the

case of EX PARTE BURROWS. Before doing so it is

perhaps appropriate, just for a moment, to turn
to section 29 of our Act. There are counterparts
in it in other States of course. That is the
section which deals with the consequence or sanction

for non-stamping. That section, in the form in

which it has been more or less since stamp duty

began, talks about, among other things, the

non-availability of the instrument:

unless it is duly stamped in accordance

with the law in force at the time when

it was first executed.

That, in essence, was the sort of issue that was

involved in EX PARTE BURROWS because of a change

in law which had affected the appropriate rates

of duty. So the issue that arose was whether the

instrument should be stamped at one rate or another.

The case is reported in (1906) 6 SR(NSW) 606.

The argument proceeded upon the basis that - and

one can see this from looking at the argument as

reported at page 607 - an instrument only ultimately

fell for duty if it met the statutory description.

In other words, if one was looking at a duty on

a conveyance - and that was the issue, of course,

that was involved in EX PARTE BURROWS - the

instrument did not meet the statutory description

until such time as it became effective. It was

that argument, if one looks at the words of the

argument at page 607 at point 6:

The only description in the schedule applicable

to this deed is a conveyance. "Conveyance"

means a completed conveyance. This document

had no legal effect until March, 1906,

when it was executed by the assignor. The

Act does not require duty to be paid on a

document which has no legal effect.	The
words "first executed" ·,.)

which were always in the Act -

refer to the moment when the document becomes

a conveyance, that is, the first moment after

execution -

there is a reference to ALPE -

Executed means signed and sealed. That means signed and sealed as a conveyance.

C2T38/l/MB	56	14/9/88
Pendal(2)

MR HILL (continuing): It was that argument which was accepted

by the Full Supreme Court of New South Wales in

that decision which brought about the result, of course,

that the appropriate rate of duty was that applicable

at the time when the instrument first met the

statutory description. Now although it is clear

enough that the legislature intended to alter the

consequence of that cas~ so far as it affected what

law was to be applied in a section such as
section 29, it is certainly not at all clear that
the intention of the legislature was to bring
about a result that instruments which did not meet
the statutory description at all because they were
ineffective, were nevertheless charged with duty
from the very moment of time that someone first

put a signature upon them.

But if that argument be not correct, and we

would submit it really does not matter greatly for

the purposes of this case, one comes back to the

sort of approach which was dealt with by this Court

in HOPKIN's case. But one must recall when reading

HOPKIN's case- my learned friend pointed it out although perhaps not with as much emphasis as we

would -that the legislation at that time in Queensland.

as the original United Kingdom legislation did,

prohibited documents from being stamped after execution

so that one had to judge the effect of an instrument

at a moment of time before clearly it could not

have execution, was the way in which it was looked

at. The factual situation that caused the issue to

arise, of course, was that the document which was

said to be a settlement in that case was executed

at a point of time before the shares had actually

been transferred to the trustee.·

BRENNAN J: Well, the theory at one stage, of course, was that

you only brought into existence documents which were going to attract duty if it was written on stamp paper?

MR HILL: Yes, that is so, Your Honour.
BRENNAN J:	But have any of these cases which speak about the

first moment of execution been cases decided in

reference to statutes which created a personal

liability?

(Continued on page 58)

C2T39/l/SR	57	14/9/88
Pendal(2)

MR HILL Only the reference to the

SUPERANNUATION FUND INVESTMENT TRUST case and

that is a slightly different situation.

BRENNAN J: Yes.

MR HILL: 

Certainly none of them were concerned with that issue but, even if one looks at the legislation on the basis of seeing what legal effect the

instrument is ultimately capable of having, which

is the way in which Sir Owen Dixon approached the

problem in the passage my learned friend read, in

some ways when one applies to that the sort of

reasoning that was applied in this Court in

ROBERTSON's case which my friend also read, if

you recall that the declaration here in question,

if it be one, is a declaration in respect of
the shares. It is not a declaration in respect

of anything else,  it is the shares. The obvious

order of looking at its legal effect is to look at

it on the basis - and this is, of course, as

Your Honour Justice Deane said,  a peculiar case

because the declaration appears in the very

document which agrees to transfer the property to
the trustee - logically one has the agreement,
the transfer to the trustee and the declaration.

It is only then that the instrument can have the

legal effect which it was intended to have, if it

be a declaration of trust in that sense.

So that, in our submission, looking at it in

that way, one can quite readily see the case as
being one where it is correct to say both that

at the time of the declaration, 'looking at it
prospectively, it is a declaration in respect of
"is vested" or an "is vested" case falling within

paragraph (1) or, if one is looking at the matter

by reference to paragraph (3)(b),' is a case where
one can see the case as being one where the property

was conveyed.

We do have, in this case, the somewhat peculiar

situation that the vesting of the trust property

occurred at the same time as the execution of the

share purchase agreement as the appeal book shows

in the stated case which is set out at page 5 of

the appeal book,and I will not take Your Honours

back to it, in clause 7. They were the agreed

facts upon which the matter proceeded and the

declaration became, obviously, effective in law

at the moment that the shares were transferred to

Pendal and it is for that reason that we say that

the exemption in paragraph (1) is, therefore,

applicable. If, contrary to our - - -

BRENNAN J:  Do you see any temporal distinction between the

words "is vested" in (1) and "was conveyed" in (3)?

C2T40/l/SH	58	14/9/88
Pendal(2)

And, if it was conveyed, it is vested? If it

is vested, it was conveyed?	Do you see any
difference between the two?

MR HILL:	We would not see, Your Honour, a necessary
difference between the two. Paragraph (3)(b) was, obviously, in our submission. not dealing
with the resulting trust situation. It covers a different area. The sort or area one would,
perhaps, contemplate that para~raph (3)(b) would
be concerned with would be one where A had
settled property on B, the trustee, and then the property is conveyed across, not necessarily
by written settlement but the property is conveyed
in a settlement made by A upon the trustee so that
it does cover a different area of discourse to
paragraph (1) but, we would submit that the form
of interpretation applicable to each would be the same.

Before going to paragraph (3), might I refer

to other sections of the Act which, in our submission,

seem clearly to point to the fact that one really

must look at events that happen to ascertain whether
a particular exemption is or is not available.

Perhaps giving various examples does not necessarily solve the problem but, we would submit, it shows

perhaps a fairly consistent legislative scheme.

Might I take the first of these, section 84B. Of course, this was inserted in the Act much later

in time but it is an illustration of a case where

the legislature clearly must have intended that one

looks at actual events. Section 84B is concerned

with -

DEANE J: Before you go to that, Mr Hill, on this approach,

if you look at (2)(a), if it said 1 "all property",

" $1 plus, all property" Y{here normally one

would say 1.t was "the dollar", on this approach

would you look at all the property that had been

vested in the trustee at the time the deed was

stamped?

MR HILL:  The property that is the subject of the declaration.

(Continued on page 60)

C2T40/2/SH	59	14/9/88
Pendal(2)

DEANE J:  If it said "all property transferred", "the

sum of $1 hereby transferred all subsequent

property", as I understand it, the current
approach would be that you do not pay duty on

subsequent property.

MR HILL:	That would be so.
DEANE J:	On this argument would you pay duty on all property that had been transferred at the time the Commissioner came to look at it?
MR HILL:	Under paragraph (1), Your Honour?
DEANE J:	No, under paragraph (2)(a).
MR HILL:	I am sorry.  I thought Your Honour said
paragraph (1).  No, Your Honour, because the
literal terms of paragraph (2)(a) require you to look at what the property comprised in the
declaration is. That seems to be pointing to actual property.
DEANE J:	But what if it said 11 all property transferred 11 ,
subsequently transferred and at the time the
Commissioner looks at it you can identify all
this additional property that had been transferred?
MR HILL:	A question of construction would arise. It is
a matter, I think, dealt with by·His Honour
the Chief Justice in DKLR as to whether that
might or might not be caught and His Honour
leaves that open, but it would be a question of
11 the property comprised therein 11 , and I think that construction of what is meant, by the words
is the point that His Honour the Chief Justice
did leave open for just that reason.

\

Coming back to section 84B, that section is

concerned with the liability for stamp duty of
collateral securities.	The obvious case that it

would arise in, no doubt, is the case where there

is executed a primary security - let it be

assumed a mortgage - and there are other collateral

securities that, in the ordinary case at least,

would be all executed together. Now, what the

section does in subsection (2) is to say, "Any

loan security which is a collateral security for

the same moneys as is secured by primary loan

security shall, unless the primary loan security .....

is duly stamped, be liable to duty." Now, the end

consequence of an argument that says that one looks

at the matter at the time the document is first

signed, or indeed perhaps even when it is effec~d

would be to say that unless the primary loan security was

stamped at the time of first signing, each of those collateral

securities would be also liable to duty because at that mcment

of time the primary loan security is not duly stamped.

C2T41/l/HS 60 14/9/88

Pendal(2)
MR HILL (continuing): In our submission, such an absurd

construction would be very unlikely. Practically,

of course, if primary and collateral securities

are executed at the same time, they are lodged
together at the Stamp Duties Office and as an

invariable matter, they are stamped, one of them

as a primary security and the balance exempt

from the ad valorem duty as collateral securities.

And in our submission that practice accords with the general submissions that we have made because the obvious legislative scheme was to avoid there being two lots of duty, both on primary and

collateral securities at the same amount.

Another example of the same thing is in

73(l)(b) which I think I have already referred

to where the section is dealing with a case,

either in its current form or in its prior form

with a conveyance that is made from a trustee

to a beneficiary, the exemption being conditional
upon the declaration of trust which preceded
it being duly stamped. And one could imagine

the situation happening quite often where the

original trust deed may be accompanied by the

transfer, both executed at the same time, to

protect the beneficiary.

If my learned friend's submissions are right,

it must follow that both of those documents are

liable to duty, yet that would not seem to be

the legislative intention, either in the current

section 73(l)(b) or its predecessor which dates

back, I think, to 1920. The words have changed

but not in that respect. Another example of

that is 73(l)(d), in the same section. That

section concerns itself with:

An instrument of appointment in favour of persons specially named or described as the objects of a power of appointment

contained in a conveyance on which ad valorem

duty has been paid -

There the words are "has been paid".

(Continued on page 62)

C2T42/l/ND	61	14/9/88
Pendal(2)

MR HILL (continuing):  One can,again, imagine a case where

for some reason the conveyance itself was in the process of being stamped prior to the instrument of appointment being stamped, or together with it,

but where the, if one looked at the matter at the

time of execution of the appointment, the conveyance

itself would not have been stamped. Yet, the

obvious legislative policy of all of these

sections seems to be that ultimately duty will not

be payable. If one is stamped, the other is freed

from duty.

Another example, one t½at could quite often and probably does quite often arise in practice, is to be found in. section 40A,

I think a section that has been in the Act since 1931.

That section is concerned with options to purchase

certain forms of property, including land, of course.

One can imagine quite obviously the situation where

an option was entered into and prior to the time

that the option agreement was stamped, the contract

pursuant to the option was made by the exercise

of the option. There is a slightly different form

of wording in 40A(2) because it says that:

The ad valorem duty chargeable on the agreement,

if any, made in pursuance of and by the
exercise of the option shall be reduced by the

amount of ad valorem duty paid on the agreement

creating the option.

But there is no provision for refunds or credits

in these situations. In our submission, it must

have been the legislative intention that that

reduction of duty be applicable, even if the

option agreement was still in th'e course of being

stamped at the time the actual option was exercised.

The legislature was not setting out to get double

tax in any of these situations. Section 40(4),

I have already mentioned; I do not' need to go

back to it, but that is the case, Your Honours

will remember, where there is a contract for

purchase and there is a relieving of duty on the

conveyance by virtue of the fact that the contract

itself has been duly stamped.

(Continued on page 63)

C2T43/l/JM	62	14/9/88
Pendal(2)

MR HILL (continuing):  Again, one cannot imagine the

legislative policy to be that the contract had been duly stamped at the time of first signing

the transfer. That would be a most peculiar result

because as a matter of conveyancing practice the

transfer has to be presented to the vendor for

execution. One would not imagine that the

legislature intended that if the transfer happened

to be executed before the contract was signed that

a second lot of duty would be payable on the

transfer. Another example is contained in

section 66C. All of these provisions are relieving

provisions, relief from double taxes. 66C is

concerned with a very particular amount - it is

a later addition to the Act; it came in in 1966.

It is concerned with property being conveyed

subject to an option and subsection (2) says

that if:

duty has been paid in conformity with

subsection (1) on an agreement -

again using the past "has been paid" words -

the conveyance made in conformity with the

agreement shall not be chargeable with

ad valorem duty.

Again, it would seem that the legislature was

contemplating the avoidance of double tax and was

using words which,while in the past, are applicable to deal with the situation that the instrument may, on my friend's theory, be liable for duty, in

theory at least, at the time someone first signs

it but nevertheless when it comes to meet the

statutory exemption it will then be exempted.

Another example of the same kind is contained
in section 76(2). That section is the corollary

in respect of leases to the provisions relating

to agreements for sale followed by conveyances.

(Continued on page 63)

C2T44/l/MB	63	14/9/88
Pendal(2)

MR HILL (continuing): Under our Act in New South Wales,

it is different in some other States, the definition
of"lease"in section 76 includes an agreement for

lease, so that but for subsection (2) both an

agreement for lease and a lease would be liable to

the same ad valorem duty. The double duty is

relieved by subsection (2). It is interesting

because the lease has to be made subsequently to

the agreement, so the lease obviously is going to

follow the agreement and in conformity with the

promise or agreement is to be charged with the

duty of 50 cents. Again there is a provision

which is concerned with alleviating the double

tax that arises if both documents were signed. Yet

if you looked at the matter where perhaps at the

same time both the agreement and lease were signed
in anticipation, perhaps, of some ultimate settlement,

at the time of signing both documents would seem

to be liable to duty and exemption only applicable

where the lease is made subsequently to the agreement.

Those are all examples, in our submission,

which point to the proposition that the legislative intention throughout the Act is to enable, at least in respect of exemptions, the matter to be looked

at by asking the question, does the instrument

meet the statutory description. If it does, and

the description is an exempting one, then the

exemption, in our submission, is available. We would

put the matter, also, by reference to another set

of circumstances which we have dealt with in point 8

of our submissions in respect of the exemption in

clause 3, but which is of general application, by

reference to the facts in the ME~A HOUSE case in

64 SR(NSW) 290. The actual detail of what was said

in the judgments is not of great significance in this

case. But the facts were really quite simple.

MENA HOUSE,which is well known to ½hose from

New South Wale8 is a place where barristers have

chambers, had an agreement for lease for a particular

rent and a particular term. After that agreement

for lease had been executed there was a subsequent

agreement whereby the rent was increased and the

term was increased.

(Continued on page 65)

C2T45/l/SR	64	14/9/88
Pendal(2)

MR HILL (continuing):  They were the facts upon which the

case was decided and the judgment of the Court

was given by Mr Justice Else-Mitchell with whom

the Chief Justice Mr Justice Collins concurred.

That judgment was that although the agreement

varying the agreement for lease in the manner

which I have described could not properly be

described itself as a lease - it did not come

within the statutory definition in section 76 -

the execution of the subsequent document brought
about the result that the original agreement
for lease was incorrectly stamped, the result being,

of course, that the Commissioner was effectively

successful in recovering the duty as if it had

an original agreement on the totality.

But the point of the case for present

purposes is that the subsequent events in that

case, namely the entering into an agreement for

lease, brought about the result that the original

agreement was not properly stamped. It is a good

illustration of a case where subsequent events

are taken into account and have been taken into

account in determining a liability for duty.

The actual passage in the judgment which makes

that clear is at page 294, about point 4 of the

page where His Honour says:

The conclusion that the deed

operated to vary the original

agreement means that as and from

its date -

that is the date of the second agreement -

the agreement for a lease as varied

bore inadequate stamp duty for duty

had been paid only on an annual rent

of £87,000 -

and the suggestion was that the additional duty

be denoted on the original agreement.

BRENNAN J:  When you have got these variations in the

amount of duty payable which, on your argument,

occur later in the life of the document, what is

the availability of the instrument pending that

later development?

MR HILL:  That is a difficult question which is not addressed

in that particular judgment. It had been duly

stamped at the time of first execution in accordance

with the law at that time and it may be that it

is still effective, although charged with duty,

a strange result, but that may be the result of it.

BRENNAN J;

In New South Wales is there any practice of

producing a document in court unstamped with an
undertaking?

C2T46/l/HS	65	14/9/88
Pendal(2)

MR HILL:	Yes, Your Honour, and, indeed, it has been the
subject of judicial decision that that is a proper course to take. Of course, what we have said
about those matters has equal application to paragraph (3)(b) as it does to paragraph (1). Obviously enough, when one comes to look at paragraph (3)(b), it is not confined to a case where the trusts are set out in the instrument of conveyance which is referred to in paragraph (3)(b). That that is so can obviously
be seen from paragraph (a) because that is a
case which is dealt with in paragraph (a); so
paragraph (3)(b) clearly goes beyond that class
of case.

Leaving aside, for the moment, the question

of whether or not the conveyance was properly
to be regarded as liable to ad valorem duty for
the purposes of that exemption, in our submission,
when one has a case such as here that the

declaration and conveyance occur, as it were,

together, certainly prior to any stamping, it

is not difficult to see that the instrument will

meet the statutory description of being a

declaration whereby the same trusts are declared

as those upon or subject to which the property

was conveyed. If one asks the question, "Is h . h ? II h . "Y II •

t 1s sue a case. , t e answer 1s, es. , 1n

our submission, but for the issue of whether
or not the conveyance is properly to be regarded

as duly stamped.

My learned friend put some considerable

weight upon the decision of this Court in the

DKLR case. With respect, it was clear enough

once the majority of the Court had taken the

view that the transfer was exempted from ad valorem

duty, that being the only possible instrument

that otherwise was liable for ad valorem duty,

that paragraph (3)(b) could have no application.

The only member of the Court who required to

consider that matter was Your Honour Justice Brennan

who, of course, took a different view of the

liability for stamp duty of the transfer.

So it was only in respect of Your Honour's

judgment that the issue arose.

(Continued on page 67)

C2T47/l/ND	66	14/9/88
Pendal(2)

MR HILL (continuing):  One certainly cannot say from the

answers that were given to the questions in the

stated case that any other member of the Court -

leave aside His Honour the Chief Justice for a

moment - at that time answered the question in a

way that is necessarily adverse to our clients.

It was a matter which did not arise for decision in the judgments of any member of the Court other

than Your Honour Justice Brennan. It is true

that the Chief Justice expressed views on the

matter, which my learned friend has read to

Your Honours and I will not go back to them - but

certainly His Honour did not need to decide the

issue and, indeed, in my recollection of the case

there was very little argument - in fact no

argument as I recall - addressed on the (3)(b) argt.m::nt

at all because the arguments for the taxpayer -

that both documents were exempted from duty, not

that one of them was liable and one not, though

it certainly was an issue in the stated case.

The other issue which arises under paragraph (3)(b)

which we must address is the question of whether

or not the conveyance in the relevant sense is
liable to ad valorem duty in a case such as the

present.

MASON CJ:  Mr Hill, I suppose the question does arise -

although your last submission would indicate that
perhaps it was unnecessary - whether you should

be given, as it were, leave to present an argument

challenging the decision, if there was a decision,

on paragraph (3)(b) in DKLR, subject to anything

that Mr Sheller may say in reply~ I think you can

proceed on the footing that you have that leave.

MR HILL:  If Your Honour pleases.

MASON CJ: But, as I say, your last submission really is to

the effect that there was not a decision of the

Court on (3)(b)?

MR HILL:  Yes. We have rather taken the view that it was

not a matter - it certainly was decided on the facts of that case and in the way the majority

found it no other answer could have been given

to (3)(b) but the one that was given. One has

to, in our submission, look at the scheme of the

Act in relation to agreements and conveyances.

Historically, of course, if one traces the matter

back to the United Kingdom, the duty was a duty on

conveyances and there was no duty at all, originally,

on agreements. That, of course, leaves a fairly

unsatisfactory situation for the legislature, or at

least it was thought to, presumably in New South

Wales.

C2T48/l/MB	67	14/9/88
Pendal(2)

MR HILL (continuing): It was a result of that that

agreement for sale or conveyance to be charged

section 41 of the Act was, no doubt, introduced. the

with the same ad valorem duty as is chargeable

on the conveyance itself. And in in the course

of the judgment of the Court of Appeal in

New South Wales in BAMBRO - I will not take

Your Honours to it, but just advert to it - an issue arose in that case as to the liability for

duty of an agreement where there was an agreement

to sell the property, and there was another agreement

to build a building upon it. The issue arose as

to the proper stamp duty to be payable in such a

case where the agreement was to be completed .within

three months, way before the building was ever

likely to be completed. The court in that case

discussed in some detail, in finding for the

taxpayer, the ,operation of section 41. But what

matters for present purposes is that section 41

was there described, and we would say accurately

described, as providing an anticipatory duty.

The duty was chargeable in anticipation, as it

were, under section 41 so that when the conveyance

comes to be executed, as we have seen, section 41(4)

operates, as it were, to exempt it but the duty overall has, of course, been paid. That is the

scheme obviously of section 41(1) and 41(4).

Now, when one comes back to look at the

provisions of (3)(b) under the heading "Declaration
of Trust", the words used require that:

the same property was conveyed to :the

person ..... by an instrument duly stamped

with ad valorem duty.

It does not, as such, say that the' conveyance

has to be the instrument stamped with ad valorem

duty. It merely says that:

the same property was conveyed.i ... by an

instrument duly stamped with ad valorem

duty.

(Continued on page 69)

C2T49/l/JM	68	14/9/88
Pendal(2)

MR HILL (continuing): In our submission, there is little

difficulty in regarding the agreement and transfer

together forming as they do one transaction as being
the documents whereby the shares, in this case, have

been transferred to the trustee and, of course, if

one construes it that way, as we would submit one

should, one has the situation that the ad valorem duty will have been paid and, accordingly, in our submission, the provisions of (3)(b) would,

likewise, have operation if paragraph (1) be held

not to.

Any other interpretation, with respect, produces

a most peculiar result. My learned friend's submission

must require the legislative policy behind (3)(b) to

be that if there is a transfer upon which ad valorem

duty is paid, not preceded by an agreement, the

exemption would apply but if there is an agreement

and transfer together, the exemption does not and

it is possible, of course, that such a capricious

result was intended by the legislature but, in our

submission, one would pause considerably before

that result is accepted, particularly when there

is another way of construing the section which

does not produce that peculiar result.

Your Honours, might I then deal with other

matters in our notice of contention that are not
dealt with yet by my learned friend and deal with

those fairly shortly.

The very first issue that logically arises

is whether in a case such as the present the

instrument is a declaration of trust. We start

our submissions on the view that the majority

judgment in DKLR is the judgment of

Your Honour the Chief Justice. There is a

slight divergence - I think my friend has read some of the passages - between the judgment of

Your Honour the Chief Justice and Mr Justice Stephen

and Your Honour Mr Justice Brennan when it comes to	on the one hand, and the judgment of Sir Harry Gibbs	the question of "to be vested", the difference being
that, on the one view of the matter, to be vested
is a matter determined by intention.

(Continued on page 70)

C2T50/l/SH	69	14/9/88
Pendal(2)

MR HILL (continuing):  On the other view of the matter it

goes wider than that, as Your Honour Mr Justice Brennan

put it in terms of futurity. Some of the then

Chief Justice talked about it in terms of intention

or expectation. There are obviously slight

differences in meaning. But accepting the proposition

that the intention view represents the majority

view on that matter, an instrument will only be

a declaration of trust of property to be vested

if that necessary intention is to be found. And

indeed that accords, I suppose, with the ordinary

notions of equity where	trusts ultimately do
depend upon intention.	When one looks at the
.	share sale agreement, which is in the appeal book

at page 36, and goes to clause 1.4, it is in the

middle of a series of paragraphs which concern
themselves with the, if one likes, completion. Clause

1.3 starts off dealing with what is to happen on

completion of the share sale agreement and 1.4

follows logically from that providing that on

completion RDC shall: 

deliver to DTA transfers of the ..... Shares

in favour PN and PN shall hold such

shares as nominee for BTA.

Now the first question of construction that arises

is what the means in the context of this agreement.

There are a number of possibilities. Clause 1.4

may do no more than explain the capacity in which

PN - Pendal is to be taking the transfer of the shares at all, namely in its capacity as nominee for BTA. Indeed, having regard to the recitals to

the agreement, at page 33, recital G, one can

well understand the need for such an explanation

because BTA entered into the agreement in its

capacity as trustee of the property trust.

(Continued on page 71)

C2T51/l/SR	70	14/9/88
Pendal(2)

MR HILL (continuing):  One would be concerned, no doubt,

as vendor that nevertheless title was being taken

in the name of some other company and one

possibility of explaining clause 1.4 is not that
it demonstrates an intention on the part of Pendal

to hold the shares for BTA but rather as explaining

the capacity in which it is to take title.	The
other way of putting clause 1.4 - - -

BRENNAN J:  I do not understand that distinction you have

just drawn, Mr Hill.

MR HILL:	Your Honour, it is a matter of construction of
1.4. Let it be assumed one had an agreement
that said, "I, as trustee for X, am buying this
property." In our submission, it would not necessarily follow that the use of those words, "as trustee for X", was to be taken as a declaration of trust falling within paragraph (2)(a). Whether it did or not would depend, in our submission,
upon whether it was intended to have that effect.
The fact that intention is relevant can perhaps
be seen by the facts of a case that is reported, although it is not on our list of authorities,
which perhaps pointed it up rather nicely.

It is a case involving Seppelts, the wine

merchants and they had a spirit merchant licence

and they appointed their manager, under the

LIQUOR ACT, as the person who, of course, was

to take out the licence and a document was executed
which, on one construction of it, said that the

manager would hold everything in the building,

including all the stock of alcohol, worth no

doubt a lot of money, upon trust for Seppelts.
It was never intended, at all, it is a matter

of fact when the matter was investigated, that

there be any trust relationship at all or that
the stock of wine and spirits would ever go into
the hands of the trustee.

In those circumstances it was held, and

we submit correctly held, that it was not a

declaration of trust that fell within

paragraph (2)(a). It is not quite the same as this
case but that case just points up the relevance
of intention in looking at whether something
is or is not a declaration of trust. If it merely

was explanatory of the capacity of someone, as

contracting party, then in our submission it

would not be an instrument declaring that property

was held upon trust.

DAWSON J:  Would there be any point in Pendal Nominee being

a party - - -

C2T52/l/ND	71	14/9/88
Pendal(2)

MR HILL: Yes, there is, Your Honour. There is a very

significant reason, in this case, and that point

arises out of clause 9 of the deed which

Your Honour will find in page 51 of the appeal

book.

(Continued on page 73)

C2T52/2/ND	72	14/9/88
Pendal(2)

MR HILL (continuing):  Without going through the rest of the

agreement, the agreement, as Your Honour would

expect, contained a lot of warranties and

covenants and so on, and clause 9 provided that:

This deed has been entered into with the intention that the benefit of the covenants, agreements, obligations and

warranties -

inter alia on the part of RDC, the vendors,

would enure for the benefit and be enforceable by

Pendal, and that, we would submit is what Pendal

is there for, not so as to declare a trust of the

relevant property. Another way of looking and

construing clause 1.4 is to see it as a

direction from BA directing Pendal to do so,

rather than as a declaration by Pendal that it

do€s so. That is another way of perhaps putting

the same thing, that it is not there with an

intention to declare the property referred

to in it would be held upon trust.

BRENNAN J:	What rights do you say PN had under clause 1.4?
MR HILLS:	Not under clause 1.4, under clause 9.
BRENNAN J:	Under clause 9, yes?
MR HILLS:	The benefits of various warranties, including

and other covenants in the document - - -

BRENNAN J:  Putting clauses 1.4 and 9 together, did PN

acquire any rights?

MR HILL:	Yes, Ydur Honour, because lei it be assumed that
there was a breach of one of the warranties,
say about income tax provisions, or - there are
a whole series of warranties that were set out
in the document.  The purpose 'of clause 9 is to
give Pendal a direct obligation of enforcing
the matter.
BRENNAN J:	Was that so?

MR HILL:  It would seem to be, Your Honour. It also

might give Pendal - - -

BRENNAN J:  Why is it if one puts clauses 9 and 1.4 together

BTA is not entitled to say, as against PN, "You're

my trustee"?

MR HILL:	That depends upon the construction of clause 9,
of coursei but although BTA is referred to, one
really has to read it distributively in clause 9.
In other words, the covenants - we would submit the proper interpretation of clause 9 would be

C2T53/l/HS 73 14/9/88

Pendal(2) (Continued on page 73A)

that the covenaGts on the part of the vendors
enure not only to BTA in its capacity as trustee
of the BTA property trust, but also to Pendal
in the capacity that it has, and the covenants
on the part of, for example, BTA are enforceable

by RDC and the parties of the other side. Perhaps

it is not the best expressed clause but that would

seem to be its real purpose.

(Continued on page 74)

C2T53/2/HS	73A	14/9/88
Pendal(2)

MR HILL (continuing):  There would be no purpose in such a

convenant on the part of BTA, having regard to the

trust deed,which deals with the relationship between

the nominee and the trustee of the unit trust deed;
that is a different document. Turning further to

our submissions, we point out in clause 3 that

Pendal, of course, was a subsidiary of BTA, that is,
a wholly-owned subsidiary. That is dealt with
in the stated case. It was normally used by BTA

to hold assets of the property trust as nominee.

That is dealt with in the appropriate paragraph of

the stated case. It had notice, clearly enough,

that BTA was acting in its capacity as trustee.

One does not have a great deal of inference to

conclude that it had notice of the unit trust deed, of course, under which obligations were

imposed.

to that unit trust deed because it is relevant to another	Might I just take Your Honours for a moment
submission that we would seek to make.	The deed

itself connnences at page 9 of the appeal book· just

to point out some of the relevant clauses in that

deed, clause 2(4) provided that the:

deed is made with the intention that the

benefits and obligations hereunder may enure

to the extent provided to Unit Holders. In other words, the ultimate benefits anyhow were

to be enforceable by unit holders. Going to page 12

of the appeal book, the basic declaration was that

the trustee in clause 4 - line 5 of the appeal book:

declares that it shall hold the Fund upon
trust for the Unit Holders subject to .....

the terms of this deed.

Going on to page 14 of the appeal book, clause 10(4)(ii)

dealt with the vesting of investments.	I think
became:

my learned friend referred to it. Investments

vested in the Trustee as soon as:

(ii) transfers in favour of the Trustee -

arose. That is only really relevant having r~gard to

the definition of the fund which is in page 10 of

the appeal book, paragraph (j). Moving on clause 26,

by way of an example, imposed obligations, no doubt

for the benefit of unit holders, both in respect of

the trustee or the trustee's nominee, as the deed

refers to of not voting except in certain circumstances.

Paragraph (j) on page 20, which my friend read,

provided that:

C2T54/l/MB	74	14/9/88
Pendal

the Trustee may:
(aa) cause all or any of the assets constituting
the Fund to be vested in a nominee of the

Trustee to be held by such nominee upon the

trusts of this deed~

They are the trusts upon which the nominee holds,

"upon the trusts of this deed"with the ultimate

rights enforceable by the unit trust beneficiaries,

and that clause then goes on:

for all purposes of this deed investments vested

in a nominee or employee of the Trustee shall

be deemed to be investments or property held

by the Trustee.

(Continued on page 76)

C2T54/2/MB	75	14/9/88
Pendal

MR HILL (continuing): Then, going to page 21, clause 30,

the trustee declares various things, including

in (b), he is to:

retain the Trust Fund in safe custody and

shall hold it as trustee for the Unit

Holders entitled thereto upon the terms

of this deed.

Then, in (d), he:

covenants that any nominee of the Trustee

will duly observe and perform the covenants

and obligations of this deed in the same

manner as is required of the Trustee.

Those are, perhaps, the only relevant passages in

the unit trust deed that need concern the

relationships between the trustee and Pendal.

When one then goes back to clause 1.4 of

the deed, the first question that arises, assuming
it otherwise is capable of being a declaration of

trust, is whether it is, as my learned friend's

submissions assumed, a case which falls within

section 17 of the New South Wales Act. That

section, which is a section which goes back to

the English legislation, I think, is in the

stamp duty law of almost every State in Australia,

has to be seen against another principle which is

very well established. That principle is the

principle dealt with in the LIMMER ASPHALTE PAVING

CO LTD case, (1872) LR Exch 211.

The case is one that is widely cited for the proposition which was expressed in that case

at page 217, the second line of that page, where

it is said:

There is no better established rule as

regards stamp duty than that all that is

required is, that the instrument should be

stamped for its leading and principal

object, and that this stamp covers everything

accessory to this object. The covenant to

pay the 6,000 pounds, the balance of the
purchase-money, is a direct accessory to the

main object of the instrument, viz., the sale of what is for the present question assumed to be property, and the payment of the

purchase-money.

So that if one analyses the transaction, and one sees that the transaction in that case included

covenants to pay, there being a separate head of

charge under the United Kingdom legislation for

covenants to pay money periodically, nevertheless

th&~ separate head of charge did not apply.

C2T55/l/JM	76	14/9/88
Pendal (2)

for the reason that those particular covenants

were accessory to the main object of the

instrument. That is a principle which is,

one might say, almost well renowned in the

stamp duty field. So that there then is, of

course, a difficulty when one looks at section 17

to reconcile that principle with the words of

section 17, because section 17, or its equivalent,

existed at the same time as that principle was

enunciated. It provides that:

an instrument containing or relating

to several distinct matters is to be

separately and distinctly charged with

duty.

One of the tests - I will not take Your Honours

to it, but merely state it - of section 17 was

that enunciated in EX PARTE HENRY in the

supreme court. The matter did not arise in

this Court, although the case went to this Court

on appeal. The case concerned an instrument which

was held to be a grant of a right of a

profit a prendre to take certain minerals out of

land, and it carried with it a right, of course, to enter into the land for the purposes of doing

it. One question that arose in the supreme court

was whether or not it should be treated as a

lease as well as a conveyance, as it were, because

it contained this right to remain on the land,

which, in one sense of the word, fell within the

definition of "lease". In rejecting the view

that it should be seen as a separate and distinct

matter, the test there that was adopted was looking

to see whether this was all one transaction, or

was it more than one transaction, and that,

with respect, would seem to be consistent with

the LI:MMER ASPHALTE line of author,ity.

We would submit that one can see this

transaction as one 'bransaction of an agreement

for sale in which the shares are to be vested

in the name of Pendal; that is the transaction,

and that if 1.4 is to be seen as a declaration,

that it is merely accessory to that principal

obligation.

(Continued on page 78)

C2T55/l/JM	77	14/9/88
Pendal(2)

MR HILL (continuing):  We say that particularly, having

regard to another principle which was not as a

principle ever said to be wrong in so far as

my learned friends were concerned in any court

before and, indeed, is of long standing and

that is to say that an instrument which does

no more than record obligations which the general

law, in effect, itself imposes will not be regarded

as dutiable and that is, I suppose, a proposition

that, in one sense, has only to be stated to be

seen to be correct. TherQ are a number of cases that

have looked at it; they are a11 very old and they

concern, for example, cases where there might be

an agreement dealing with bills of exchange and

what is to happen with them where what is said

in the agreement is no more than the law would

require held not to be liable to duty as agreements

or cases such as when one is looking at what is the

sum secured under a mortgage where the property

secured - and this is LAWRENCE V BOSTON - was an

insurance policy and, under certain circumstances,
the lender might have to pay the premium to the

insurance company and then was entitled to look

to his security over that for payment of the

premium. That was said not to be a relevant

matter to increase the sum insured because - or

to regard the security then as being not a fixed

security - because it was only what the law itself

would, in any event, imply. Those are all cases,

of course, on slightly different contexts but the

way we would use them in this case is this: that

if one is looking at the transaction, as we submit

one must, as an agreement between BTA and the

vendors for the shares to be purchased and

transferred to Pendal, the rest of clause 1.4

does no more than enunciate what the law would

itself require and should not be' seen, for that

reason, as being other than accessory to the main

obligation under the agreement.	We rely, of course,
upon the facts which we have set out in clause 3 as	establishing obviously what the law would otherwise
require.

Finally, Your Honours, there is another - - -

DEANE J: If that be put as a distinct proposition, it would

deprive (3)(b) of most of its content, would it

not?

MR HILL:	We would not put it as a distinct proposition.
That is why we put it in connection with section 17
and the leading in principle object ..... We would
not say that - I suppose it could be said of the
declaration in DKLR that, in one sense, it did no more than the law would otherwise impose.

C2T56/l/SH	78	14/9/88
Pendal(2)

DEANE J:	So, you would not put it if 1.4 were in a deed between BA or whatever it is and Pendal, · , .. ?
l1R HILL:	You could not put it in that sense, no. We put
it only in the context of section 17 and the question of whether it does, in fact, involve a separate and distinct matter. If it does involve a separate and distinct matter, then the submission, of course, would fail.
DEANE J:	Now, while I am interrupting you, I have not checked
but you no doubt have, is Pendal or PN the only party
to the deed who is not caught by the acknowledgement
under clause 9?
MR HILL:	I have not checked that, Your Honour. I would have
thought all parties appear to be there but - - -

DEANE J: Well, no, Pendal is not. I thought that was your

point.

l1R HILL:  No, Pendal's name is there, of course.

DEANE J: Is that so?

l1R HILL:  Page 51. PN is in the third last line, line - - -

DEANE J:	No, but - well perhaps I am adding to your point. I thought your point was that the covenants, agreements,
obligations and warranties on behalf of,which are
made enforceable by 9, exclude that given by PN?

(Continued on page 80)

C2T56/2/SH	79	14/9/88
Pendal (2)

MR HILL: Yes, I am sorry, yes. I think all the other parties

are there. I must say I certainly, I will just

have someone check it, but I would believe that all

the other parties are there. The parties to ·the agreerrent are BT

which is there, Pendall, RDC is there, RDC Properties

is there, Seven Hills is there and so is - yes,

Suburban Centres is not there and St Ives is not there.

I would not like to explain why it is not there, but

certainly they are not all there.

BRENNAN J:  Mr Hill, before you resume your argument, can

I ask, is there anything in the agreement other than

1.4 which binds PN to accept a transfer of the

Seven Hill shares?

MR HILL: There is a question, of course, as to whether it

does bind Pendal to accept those shares.

BRENNAN J: Well, I appreciate that. I am asking you apart

from 1.4, because the next question is, does 1.4

bind you to take - - -

MR HILL: There is another provision as to what is to take

place on completion at page 40 which merely binds

RDC to deliver to BTA:

duly executed transfers in favour of PN -

that is the combined effect of 3.3.1 and paragraph (a).

I think that is the only - - -

BRENNAN J: That only takes it as far a~ getting the transfer

instrument into the hands or BTA?

MR HILL:	Yes.
BRENNAN J:	So far as PN is concerned, the question as

to whether there is a declaration Qf trust may

turn on whether 1.4 imposes an obligation on

PN to accept the transfer and to hold the property

during this period.

MR HILL:	We would ask rhetorically, why would such a
clause be likely to be in such an agreement. To
start with Pendal, of course, is a wholly owned subsidiary of BA and its ordinary nominee. Secondly,
it is a matter of indifference to the vendors
whether or not Pendal actually takes the transfers - its obligation is completed when it hands over duly executed transfers in favour of Pendal and
receives its purchase money.

BRENNAN J: It does not altogether assist your argument,

the question I am putting to you, I think, because

it may be that if 1.4 exposes PN to an obligation

to take the shares, then we are dealing with a

transaction that is between Pn and BTA, separate and

distinct from the -

C2T57/l/SR	80	14/9/88
Pendal(2)

MR HILL:	Yes, we would submit that there are two constructions
of it open, that is why I put it that way. And
the first construction, of course, is merely it is
an explanation of the capacity, the reason why
the title is not going to BA, which is where one would expect it to go, given that BA is a trustee,
but going to Pendal.  The alternative, of course, is,
as Your Honour says, a direction from BA to Pendal. It certainly cannot have anything to do with RDC,
it must be a matter of total indifference to RDC.
If it were a direction from BA to Pendal, when one
comes to look at the second schedule charge, it
would seem odd that it would fall within it because
the charge contemplates that it is concerned with
a declaration - to put it more accurately, the
second schedule charge, though it has a heading
"Declaration of Trust", of course does not, as such,
use those words.

(Continued on page 82)

C2T57/2/SR	81	14/9/88
Pendal(2)

MR HILL (continuing): It talks about an "instrument

declaring", that would seem to be something done

by the trustee not something which some other

party imposes upon the trustee, that

property be held in a certain way. We would

submit that, to answer Your Honour's question

more fully, there is no obligation imposed upon

BTA, but if there were, it was only at the

Pendal, firstly, either at the insistence of of

insistence of BA and it would not then fall within

the words of paragraph (2)(a) because it would

not be relevantly an instrument by Pendal

declaring that it will hold.

It is interesting that the words

paragraph (2)(a) uses are:

declaring that any property vested or to

be vested ..... is or shall be held -

It does not seem appropriate for an imposition

by BA on Pendal but certainly appropriate if

the document properly to be construed is a statement

of intention by Pendal that it will hold. That

seems to be the sense in which paragraph (2)(a)

operates. Is it a statement of intention, at

least in the case of "to be vested" trusts, evidencing
the intention of the declarant that he would

hold the property.

BRENNAN J: If, on its true construction, 1.4 is a covenant

by PN to hold as nominee for BTA, then your argument

would fail on this point.

MR HILL:	That part of the argument would fail, yes,
Your Honour, though it would still be a question
as to whether it was to be treated as a separate . . '
and d1st1nct matter.  They are separate arguments,
Your Honour, and they are dealt with separately,
I think, in our grounds of contention.

The remaining matter which is dealt with

in point 6 of our outline on page 2 is a fairly

short point. If I might just go back for a moment

to the declaration of trust charge.	The words
upon which this submission focuses are	that

the declaration has to be one whereby the person
who makes the declaration declares that the property:

is or shall be held in trust for the person or persons or purpose or purposes mentioned

therein -

itself of "persons" or "purposes as the case	so one is looking at a mentionin8 in the instrument
may be. As Sir Owen Dixon said in the TOOHEYS'

C2T58/l/ND	82	14/9/88
Pendal(2)

II II b

case, t ere erence to purposes seems to e h f

a reference to charitable trusts and that would

seem, we would submit, to be correct.	So that
we need only focus on the reference to "person	II

or persons .

Now, prima facie, of course, the words

"as nominee for BA", if one reads no more than

those words, is a trust for persons and we would

not, of course, submit otherwise. The question

though that must be posed is: what do those words

mean in the context of the relationship between

those two parties and particularly having regard

to the unit trust deed? And we go back to

clause 29(j) of the unit trust deed on page 20

of the appeal book which, we submit, may provide

a dictionary for what is meant by the words "as

nominee for BA".

(Continued on page 84)

C2T58/2/ND	83	14/9/88
Pendal(2)

MR HILL (continuing): It is obvious that the draftsman did

not use the words "as trustee for BA" or words

of that kind, though the word "nominee", of course,

can have the same sort of meaning. When one looks

at clause (j) the obligation is if the trustee at

least elects to:

cause all or any of the assets ..... to be vested in a nominee of the Trustee to be held by such nominee upon the trusts of

this deed.

Other provisions, as I have already read to

Your Honour~ indicate that the ultimate trust,

which is relevant, is the trust for the benefit

of unit holders. If clause 29(j) provides a

dictionary for the meaning of clause 1.4, what

clause 1.4 is meaning is that Pendal shall hold

the shares in the sense in which those words

"nominee for BA" are used in clause 29(j).

DAWSON J:	You mean you do not need a trust, you just say, "Well, look, you are our subsidiary, that is all
we need, it does not matter" - - -
MR HILL:	We certainly do not need a trust, Your Honour, but

that is not quite the point of my submission,

with respect. It was rather that the words

"nominee for BA" are given a dictionary meaning
in 29(j) as between those parties, as meaning

"holding upon the trust of this deed".

DAWSON J:  It is much the same thing, you do not need a

trust as between the nominee and the nominor

if that is the word.

MR HILL:  Yes, Your Honour, but it has this effect too,

with respect, that there then is so read no person

mentioned in the share sale agreement, clause 1.4,

because the mentioning of persons, according to

the second schedule charge, has to be in the

declaration itself. It depends, of course, solely

upon the proper construction of clause 1.4. It

was the draftsman of clause 1.4 saying, "Pendal

shall hold upon trust for BA", or was the draftsman

saying, "Pendal shall hold" - in the sense that

clause 29(j) requires - "upon the trust of the

unit trustee." If it is the latter then, in our

submission, the second schedule charge has no

operation; if it is the former then, of course,

it does. It is a matter really of construction

of the relevant paragraphs.	Your Honours, those
are our submissions.

MASON CJ:	Thank you, Mr Hill.	Yes, Mr Sheller.
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MR SHELLER:  Your Honours, may I start by referring again,

briefly, to the questions that I was asked in-chief

about refunds and simply say this to Your Honours,

that refunds would be allowable up to signing by

all parties under section 26 and after exchange

on rescission or annulment under section 41(7),

and the interregnum seems to be taken up by

regulation 30 and subregulation (6) may deal

with the problem that Your Honour Justice Deane

mentioned to me of a draft being signed and then

abandoned. Subregulation (7) was dealt with by

Your Honour the Chief Justice and thought to have

been applicable in the DKLR situation at pages 456

point 8 to 457 point 3 in Your Honour's judgment.

(Continued on page 86)

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MR SHELLER (continuing):  The passage in His Honour

Justice Mahoney's judgment at page 122 when

he refers to it gives a reference page 449,

which we thing, with respect, is incorrect.

It may be a reference to what Your Honour

the Chief Justice said at page 456, or alternatively

what Your Honour Justice Brennan said at page 472.

Secondly, Your Honours, with respect to a large
part of my learned friend's submissions on when

one should take one's stand to look at the position,

we would respectfully submit that if that approach

were to be adopted that the appropriate moment

was when one produces the document to the

Commissioner for stamping.

That would, we would submit, be entirely

contrary to the approach that was taken in DKLR

HOLDING and really produce a system which depended

upon the order of presentation of documents which,

quite apart from the fact that that would be

controlled by the taxpayer, could indeed be

entirely haphazard. Your Honours, clearly what was.

regarded as important in DKLR was the order of events
and the order of events there was declaration of

trust followed shortly thereafter by memorandum of

transfer. Now, Your Honours, if the correct approach

had been to go simply and look at the position as
at the time those documents were presented for

stamping, then one could have said, one would

think, par excellence in that case, that the

situation would then be that the property was

conveyed.

But what was consistently emphasized and has,

we would submit, been consistently emphasized in the

cases, is that the necessary point at which one takes

one's stand is the point of first execution, and

the debate has been from time to time as to when

first execution in the particular circumstances

occurred, but we would respectfully submit that in

this case, by the application of section 38, there
is no problem.	Your Honours, there is a further

problem that may be thrown up under the

legislation if one is to take the approach

suggested by my friend, and that is if one is

talking under (2)(b) of the head of charge where

one has an:

instrument declaring that any property

not identified therein and to be

vested -

Your Honour, we would respectfully submit that that

again clearly goes back to the point of time when

the declaration of trust is executed.

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MR SHELLER (continuing): It is not concerned with what the

position may be at the time the instrument is

produced for stamping.

Your Honours, so far as paragraph. (1) is. concerned,

my learned friend said that the "apparent purchaser"
means the person in whose name the title is taken.

But, Your Honours, if one to assume that that is what is meant, it still leaves open the question of

firstly who actually paid the money which the

paragraph poses, and, secondly, in what capacity
is the property transferred? Is it transferred to
the person in whose name the title is taken as
purchaser; or is it transferred, as in this case,

to that person as trustee? As we indicated before,

Your Honours, clearly, one would not have a

resulting trust which arises when the person

in whose name the title is taken is said to hold

on a resulting trust unless it is shown that that

person is the purchaser. So that if what my

learned friend says is right, then one looks here

outside and finds that indeed the transfer to

Pendal Nominees was to it in its capacity as a

trustee and not to it in its capacity as a

purchaser.

Your Honours, with respect, my learned friend,

when he dealt with paragraph (1) and the expression

"in whom property is vested", overlooked what, we

would submit, is the significant thing that the

head of charge draws a distinction between property

vested and property to be vested and there is

simply no room to embrace within "vested", property

that is to be vested at the time· of the declaration

of trust.

(Continued on page 88)

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MR SHELLER (continuing): Your Honours, if I may turn to

the other matters of contention that the respondents

raised: firstly, we would respectfully submit

that as a matter of language clause 1.4 in the

share sale deed binds Pendal Nominees to hold the shares as nominee for BTA. And, indeed,

despite the reference to the paragraph that is

concerned with warranties, we would submit that

in reality there seems little purpose in making

Pendal Nominees a party to this share sale deed

unless it was intended both to be bound to hold

the shares and, indeed, bound, we would say

inferentially from that, to accept the transfer.

If it was simply a matter of providing the

vendor with an indication of the party to whom

a transfer was to be made, 1.4 could have simply

stopped after the words "in favour of PN". There

was no further point to be achieved by the words

of obligation "PN shall hold such shares as

nominee for BTA". And, indeed, Your Honours,

both in the Court of Appeal, we would submit

correctly, at page 115 and, indeed, in the judgment

at first instance at page 93, the view was held

that that clause involved a covenant by Pendal

Nominees to hold the shares as nominee or, as

we would say, as trustee for BTA.

Your Honours, then on the question of whether

or not the "person or persons" is mentioned with in
the meaning of (2)(a), clearly enough BTA is
mentioned as the beneficiary of the trust.

(Continued on page 89)

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MR SHELLER (continuing):  We would respectfully submit that

clearly it is BTA that can call for the shares

and, indeed, it is to BTA that Pendal Nominees

is answerable and there is no room, we would

submit, for a view that in some way Pendal

Nominees becomes trustee under the unit trust deed and, in that regard, may we just invite particular attention to clauses such as 13 -

page 14, Your Honours, clauses 12 and 13 of the

unit trust deed which refer to the trustee

collecting, receiving and getting in the gross

income of the fund; then paying out costs and

disbursements; allocating amounts for provisions

and then the balance of the gross income being

available for distribution and the trustee making

a distribution under clause 13.

We would submit that, clearly, in a case where

assets are vested in a nominee, true it is they are

to be treated as vested in the trustee and we would

submit that that makes it plain that they are held

for the trustee,but the proceeds of, for example,

an asset such as the shares, the dividends, is an

amount for which Pendal Nominees would be accountable

to BTA and the money would come in to be treated by

BTA as part of the gross income of the fund to be

dealt with accordingly.

We would respectfully submit that the reasons

of Justice Mahoney at page 131 in the appeal book for saying that the shares pursuant to clause 1.4 were held in the way the language of that clause

suggests in trust for BTA.

(Continued on page 90)

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MR SHELLER (continuing):  Finally, Your Honours, on the

point that is made in reliance upon the cases that

deal with separate and distinct matters, firstly,

Your Honours, if one is talking about what is

described as the general operation of law in
the context of this case one would assume that one
is talking about a resulting trust which occurs
from the simple fact that property is vested in

a stranger to the purchase agreement or transfer.

Now, the first point, Your Honours, is that this

is not a simple trust, a simple resulting trust.

The trustee here, Pendal Nominees, is not a mere

repository with no duties to perform, a passive or

bare trustee. One only has to look at the

provisions of the unit trust deed to which my friend

has gone to make it plain, for example in

clause 26(2), that the nominee trustee has duties

beyond the mere duty of transferring the property

to the beneficiary.

Secondly, Your Honours, and it flows from that,

that what one has here is not a mere presumed or

imposed trust imposed by operation of law, but

an express trust that derives from the share

sale deed, and also from the unit trust deed.

As a matter of principle we would submit that there

is no principle consistent with the language of the

Act that stamp duty is not attracted to a document
which does no more than record an obligation in

any event imposed by operation of general law,

unless one is talking of an obligation that is

accessory to the principle or leading object

of the document, and in that sense, Your Honours,

not containing or relating ta distinct matters

within section 17(1).

(Continued on page 91)

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MR SHELLER (continuing):  The LIMMER ASPHALTE case is an

example of that where one finds a deed granting

a licence for a fee, and it is said that if that
deed had been chargeable on that basis it was

not separately chargeable in respect of a convenant

to pay by instalments. Your Honours, what we would

BTA and on the other hand there is

submit here is that there are two distinct matters. of shares to

a declaration of trust by Pendal Nominees, and a

declaration of trust by Pendal Nominees is in no

way accessory to a sale of shares to BTA.

Your Honours, there is a case, if I can give

Your Honours the reference to it without going to

it, in which Justice Sheppard in FARRAR V COMMISSIONER

OF STAMP DUTIES, 5 ATR 364, His Honour at page 368

dealt with an agreement for the purchase of property

whereunder the purchaser purchased - to put the

words in quotations - "as trustee for". It was

held by His Honour in that case, in a paragraph at

page 368 that that was a separate and distinct

matter. We would submit here that on the same

reasoning this declaration of trust is a separate

and distinct matter. It is in no sense accessory

to, or something that flows from, an agreement

for the sale of land or an agreement for the sale
of shares.

Your Honours, also one can perhaps make the point that if it were otherwise it would seem that

there would be no need for paragraph (1) under

the head of charge because, indeed, paragraph (1)

embraces an instrument declaring what is implied.

It undoubtedly covers some types of implied or

resulting trusts, but the language of that head

of charge, we would respectfully submit, makes

it plain that declarations of trust which answer

that description may be and, indeed, are to be
treated as separate and distinct matters. (Continued on page 92)

C2T65/l/MB	91	14/9/88
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MR SHELLER (continuing): Finally, Your Honours, if one

is looking at it simply as a matter of operation

of law as distinct from a matter of stamp duty

operation, there is no trust by operation of

law upon the execution or indeed the exchange

of the share sale agreement because at that time
the property,the subject of the trust,was not
vested in the trustee. Indeed, what one finds
in this document is not a trust which operates,
as it were, according to ordinary concepts of

law but operates for stamp duty purposes on the

basis that it is a declaration that property

to be vested will be held.	Your Honours, those
are our submissions in reply.

Your Honours, in the time at lunch-time,

we considered further the question of whether

there was any legislative background which threw

light on the words "apparent purchaser",

Your Honours, and those considerations and

researches threw up nothing that we think would

assist in that respect.

MASON CJ:  Yes, thank you, Mr Sheller. The Court will

consider its decision in this matter and adjourn.

AT 3.55 PM THE MATTER WAS ADJOURNED SINE DIE

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