Commissioner of Stamp Duties v Westpac Banking Corporation; Commissioner of Stamp Duties v The Commonwealth of Australia

[1993] HCATrans 9

..

,

• 1 JA

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B39 of 1992

B e t w e e n -

COMMISSIONER OF STAMP DUTIES

Applicant

and

WESTPAC BANKING CORPORATION

Respondent

Office of the Registry

Brisbane No B42 of 1992

B e t w e e n -

COMMISSIONER OF STAMP DUTIES

Applicant

and

THE COMMONWEALTH OF AUSTRALIA

Respondent

Applications for special leave

to appeal

Westpac 1 5/2/93

MASON CJ

TOOHEY J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 5 FEBRUARY 1993, AT 10.20 AM

Copyright in the High Court of Australia

MR G.J. GIBSON, QC:  May it please the Court, I appear for

the applicant in both applications with my learned

friend, MR S.L. DOYLE. (instructed by the Crown

Solicitor for the State of Queensland)

MR R.J. ELLICOTT, QC:  May it please the Court, I appear for

the respondent in the case of application No B39

with my learned friend, MR J.D. McGILL. (instructed

by Allen Allen & Hemsley)

MR R.W. GOTTERSON, QC:  May it please the Court, I appear

for the respondent in the case of application

No B42 with my learned friend, MR G.H. BRANDIS.

(instructed by the Australian Government Solicitor)

MASON CJ: Yes.

MR GIBSON: There is one preliminary matter which I should

draw to the Court's attention, that is, that there

is an application for leave to extend the time
within which to apply for special leave in the case

of application No B42.

MASON CJ: Yes.

MR GIBSON:  An affidavit of Donald Jeffrey Franzen has been

filed, deposing to the relevant circumstances.

Your Honours, I have been informed by counsel for

the Commonwealth that the Commonwealth consents to

an order that time within which to apply for

special leave be extended.

MASON CJ: Well you can proceed on the footing there is no

difficulty about time.

MR GIBSON:  Thank you, Your Honour. There are two issues on

which the applicant relies in support of the

application. They are identified at paragraph 1 of

the outline of submissions. With respect to the

first such issue, namely as to the meaning of the

opening words of section 54(1) of the Stamp Act, it

is a provision of fundamental importance to the

scheme of that Act, a like provision exists in

stamp duties legislation in most States and the

scope of its application is, in our submission, a

matter of public importance which should be ruled

upon by this Court.

MASON CJ:  I think the difficulty that faces you is in

demonstrating that you have an arguable case on

section 54(1), in so far as you say there is an

agreement for sale.

MR GIBSON:  Thank you, Your Honour. The principle in issue

is whether the opening words of that section apply

to an agreement which has, as its object, the

acquisition of property by one of the parties to

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the agreement, the purchaser, and which also

contains the following features, namely, a promise

to the purchaser by the other party to take certain
steps in relation to a third party which, if

successful, will result in a transfer of the

property in question from that third party to the
purchaser; and secondly, containing a promise by

the purchaser to pay the other party to the

agreement a sum representing the value of that

property in consideration of the acquisition.

In our outline, at paragraph 7, we refer to such an illustration, though I should comment at

the outset that the illustration given is too wide

on reflection, in that where reference is made to

the consideration being payment of a sum of money

by B to A, the illustration should more accurately

refer to payment of a sum of money representing the

value of the property to be transferred.

Your Honours, that is what occurred in this

case. The agreements between the Commonwealth and

Westpac provided for the implementation of a

mechanism, namely the introduction by the

Commonwealth of a bill into Parliament for the

transfer of property then owned by the Defence

Service Hornes Corporation to Westpac. I am now

referring to that part of the agreement as deals

with what was identified therein as the portfolio

assets.

Their Honours in the Court of Appeal concluded

that it was the amending legislation, so

introduced, and not the agreement which effected

the vesting of the property in Westpac. That

appears in the judgment of the Chief Justice at

page 164, line 15 to line 20, and also in the joint

judgment of Mr Justices Pincus and Dernack, at page

181, line 25.

Justices Pincus and Dernack were drawn by that

conclusion to decide that the agreement was not a

contract or agreement for sale within the first

limb of section 54(1). That appears at page 179

lines 25 to 35, and other considerations which

Their Honours considered to be instrumental

appeared at page 181 lines 10 to 20, and a little

earlier at page 180 at about lines 35 to 40. We do

not on the hearing of this appeal take issue with

Their Honours' conclusion that it was the amending

legislation rather than the agreement which

effected the vesting of the property, but we submit

that that conclusion is relevant only to what we

have identified in our outline as being the second

and third limbs of section 54(1) and not to the

first.

Westpac 3 5/2/93

In our submission, none of the considerations

in those passages in the judgments to which we have

just drawn attention, individually or collectively;

warrant the conclusion that the agreement between

the Commonwealth and Westpac was not one caught by
the opening words of section 54(1). In particular,

it is our submission that the fact that the Defence

Service Homes Corporation was not a party to the

agreement is not to the point. As we say at

paragraph 9(a) of the outline, an agreement by A to

sell property to Bis a contract of sale,

notwithstanding that A does not own and does not

propose to acquire that property.

Secondly, the absence of any promise by the

Commonwealth or the Corporation to transfer the

property or to vest it in Westpac, in our

submission, misses the point which is that the

opening words of section 54(1) are not concerned

with a transfer of property or the vesting thereof;
indeed, in our submission, the facts now under
consideration may be said to highlight the
differences in the scope of operation of each of
those three limbs, and particularly the difference

in the scope of operation of the first as opposed

to the second and third limbs.

The third matter to which we would refer is that the fact that the Commonwealth did not agree

to and indeed could not, in fact, direct the

Defence Service Homes Corporation to convey the property to Westpac is, in our submission, not

legally significant to the characterization of the

agreement as a sale.

Justices Pincus and Demack correctly

recognized at page 177, lines 5 to 10, that the

Commonwealth impliedly undertook to introduce the

bill into Parliament.	The substance of the
agreement between the Commonwealth and Westpac is

contained in clause 2 of the agreement which

appears at page 33 of the application book.

Particularly, we would refer to clause 2.1 which

provides that:

Subject to Clause 4 -

which deals with the vesting of the portfolio

assets in the bank -

all of the Corporation's interests, rights,

title and obligations in the Portfolio Assets

will vest in the Bank pursuant to the Amending

Act for the consideration referred to in

Clause 3.

Westpac 4 5/2/93

We refer also to clause 3 which appears at page 35,

and to clause 3.1.1 thereof, which identifies the

consideration payable by Westpac divided into a sum of $100 million and then a second sum calculated by reference to a formula representing the value of

the assets in question.

The agreement provides further by clause 2.3

at page 33 that -

the Commonwealth ..... pay to the Bank a subsidy with respect to Specified Portfolio Assets and Subsidised Advances -

and by clause 2.8 at page 34 of the application
book -

the Commonwealth agrees to grant to the Bank the exclusive right to receipt of Subsidy in

respect of the advances and other benefits as

described herein.

MASON CJ: But is it enough to constitute an agreement for

sale of property that one party to the contract

impliedly undertakes to introduce a bill into

Parliament, a bill which if enacted by Parliament

will vest property in the other party to the

contract?

MR GIBSON:  We submit that it is sufficient, Your Honour,

because the introduction of the bill into

Parliament is but the mechanism by which the

agreement between the parties is to be effected.

We immediately acknowledge that it is the

legislation which effects the vesting and that

without such legislation, such vesting could not

occur.

But the legislation was introduced to

Parliament pursuant to the agreement and pursuant

to a promise by the Commonwealth to do so, the

object of that promise being to achieve a result

which the parties contemplated, namely of course

the enactment of the legislation and, consequent

upon that, payment of a very substantial

consideration representing the value of the assets

subsequently vested.

MASON CJ:  No doubt the parties did contemplate the result, but there is not an undertaking to bring about the result. Is that not the vital point?

MR GIBSON: There is no undertaking to bring about the

result, nor could there be. The contract provides

for the consequences of a failure to achieve the
enactment of the bill but, in our submission, the

fact that the Commonwealth was incapable of

Westpac 5/2/93 guaranteeing that enactment is not critical to the issue of whether there was a contract or agreement for sale.

GAUDRON J: Is there not one difference, Mr Gibson, in that

ordinarily a contract or agreement for sale would

result in an equity in the property?

MR GIBSON: That is true. Ordinarily that would occur, but

again, in our submission each fact situation has to

be construed as to its legal significance. In this

case, in our submission, a case which is typified

by the illustration of principle to which we have

referred at paragraph 7 of our outline, the terms

of the agreement are sufficient to constitute it an

agreement for sale.

The joint judgment of Mr Justices Pincus and

Demack recognized that what had occurred might, as

they described it at the foot of page 180 of the

book, be loosely and in a commercial sense

described as a sale by the Commonwealth of the

Corporation's assets. However, in our submission,

the matter to which Their Honours drew attention

and to which Your Honours have adverted, which is

really that addressed at page 179 of the book, at

lines 25 to 35, a passage to which I have earlier
referred, is not determinative of the issue. In

other words, it was sufficient that the enactment

of the legislation was a consequence and indeed an

intended and natural consequence of the fulfillment by the Commonwealth of its promise to introduce the

bill into Parliament. ·

Our submissions, which have to this extent referred to the portfolio assets, apply equally, in

our submission, to the lending franchise, as it was

described in the agreement.

MASON CJ:

I was going to raise that with you, because in

the agreement falls within section 56 of the Act so
far as it relates to the franchise, the lending

the joint judgment they seem to take the view that

franchise. But do you not encounter precisely the

same difficulties in relation to the section 56

issue as you do under section 54 in your attempt to

make section 54 embrace the agreement so far as it

relates to the transfer of the portfolio assets?

MR GIBSON: In their joint judgment, particularly at

page 190, Their Honours referred to the first of

the elements of section 56 which is that there be a

sale, and Their Honours appear to have

distinguished or noted the distinction in the

language between sections 54(1) and 56. Whereas

54(1) refers to any contract or agreement for sale,

there are no such words which might be construed as

Westpac 6 5/2/93

words of limitation in the case of the opening part
of section 56.

In our submission, Their Honours were quite correct to conclude that section 56 was applicable

to the situation in question, though Their Honours'

decision that the sale, which was otherwise caught

by section 56, was not dutiable because of the

limited territorial operation of the Act was
erroneous. That, indeed, is the second of the two
points on which we rely this morning.

Their Honours, forming the majority, would have made a determination favourable to the

Commissioner on the basis of section 56 were it not

for the question of the territorial operation of

the Act.

Unless Your Honours have some matter which you

wish to draw to my attention, I am content to

proceed to that second limb.

MASON CJ: Yes.

MR GIBSON: This issue arises, as I have said, because of

the conclusion of Justices Pincus and Demack to

which I have just referred. The issue arises in

this way: the majority of the Court of Appeal

correctly applied section 15(a) of the Act so as to

Act defined its territorial reach. That conclusion appears in the application book at

treat that part of the agreement as concerned the the
sale of the lending franchise as a "deemed separate

instrument", and liable to duty accordingly.

page 199, lines 40 to 45 and at page 200, line 35

to page 201, line 15. In so concluding,

Their Honours referred to three English decisions from which they derived comfort in their conclusion

that section 4(2) was definitive of the territorial

reach of the Act.

Having so concluded, the question posed was

whether the "deemed separate instrument" related to

property situated or to any matter or thing done,

or to be done in Queensland, they being the opening

words of section 4(2)(a). That was a question
which Their Honours determined in the negative,

being unable, as a fact, to find any connection

between the franchise sale and the State of

Queensland. That appears at page 201, line 30 to

page 202, line 15.

Your Honours, we do not submit that

section 4(2) does not address the issue of

territorial operation. We do take issue, however with Their Honours' conclusion that it defines or

Westpac 7 5/2/93

prescribes the limits of that operation. In

particular, the authorities to which Their Honours referred at pages 199 to 200, do not purport to be

definitive in that regard. Each is illustrative of

the application of a particular fact situation to
the corresponding provisions of the legislation as
it then stood in the United Kingdom, but, none

purports to define the scope of the legislation.

Might I refer in that context to the case to

which Their Honours referred at page 31, namely
Commissioners of Inland Revenue v Maple,

1908 AC 22. At the foot of page 199, Their Honours

said:

When the case went to the House of Lords, the

Court of Appeal's decision was reversed and

the Court interpreted s 14(4) -

that is the equivalent of section 4(2)(a)

as defining territorial reach -

In fact, a perusal of the reasons given in the

speech of Lord Macnaghten do not support that

conclusion. At page 25 of the report, His Lordship
set out the facts, and nothing turns on that for

the purpose of this exercise. At page 26, the

second and third paragraphs contain the nub of

His Lordship's reasons, and particularly in the

second paragraph. We submit that it is clear from

the sentences appearing about half-way down that

paragraph that there is no intent to refer to the

legislation as being definitive in that regard.

The significance of that is by concluding, in

our submission erroneously, that section 4(2) is

definitive of the territorial operation of the Act,

Their Honours have denied any ongoing operation to

the judgment of this Court in Commissioner of

Stamps v Wienholt, (1915) 20 CLR 531, and

particularly at pages 541 to 542. In that case, in

the judgment of the Court, which relevantly

commences in fact at page 540 in the last

paragraph, expressed the view that:

Unless, therefore, either by express

words or necessary implication, the Stamp Acts

are shown to violate the principle of
territoriality, they must be constructed as

limited in their operation to the State of

Queensland, and, consequently, not to select
as the subject of taxation any person, thing

or circumstance not within the territory.

Westpac 8 5/2/93

Then at the foot of page 541 might I draw the Court's attention to the last paragraph and as it

goes over to the top of page 542.

In our submission, conceding for the moment

Their Honours' conclusion of fact that the

instrument in question, that is, in so far as it

concerned the lending franchise, did not relate to
property situated, or to any matter or thing done
or to be done in Queensland, the fact of the

matter is that as was stated in the case the

instrument was brought into Queensland. Upon its

entry into the jurisdiction it became liable to

duty, and duty was assessed accordingly.

Their Honours seem to have had their attention diverted by the discussion of the operation of

section 4(2) in such a way as to miss what we would
submit was a fundamental point. If, on the other

hand, the agreement does relate to property

situated, or to any matter or thing done or to be

done in Queensland, then, in our submission, it is

caught by section 4(2) and liable to duty on that

footing.

In our submission, it is clear from the facts

set out in the case stated and from the terms of

the agreement that it did relate to property

situated in Queensland. We have referred to the

relevant provisions at paragraph 16 of our outline,

but to canvass them briefly, clause 13.1 of the

agreement which appears in the application book at

page 106, confers on Westpac the exclusive right to
provide a specified amount of any subsidized

advance, as that term is defined, or other benefit

on which subsidy is payable.

Clause 11.1, which appears at page 84,

expresses the subsidy to be payable -

in respect of: 

(a) Specified Portfolio Assets, and

(b) Subsidised Advances made by the Bank.

The specified portfolio assets include assets

physically situate in Queensland. That appears

from clause 1.1 in the application book at page 29.

Reference must be made to the definition of

portfolio assets as well. At paragraph 10 of the

case stated, which is in the application book at

page 3, recites that:

At the time of such agreement the

Corporation held mortgages and contracts of sale some of which were bills of mortgage of

Westpac 9 5/2/93

land in Queensland or were terms contracts of

sale of land in Queensland.

Indeed, we do not understand there to have been any

confer upon Westpac an entitlement to a subsidy

issue taken below that the portfolio assets did not

include assets physically situated in Queensland.

with respect, inter alia, to portfolio assets

situated in Queensland. There was, in our

submission, an evident connection between the

agreement and the State of Queensland so as to be

caught by the opening words of section 4(2). The and it became dutiable, or liable to duty, at the
instrument was executed outside the State of

time the instrument was executed. In our submissions, therefore, a sufficiently

demonstrable error is disclosed with respect to

that part of Their Honours reasons, and this

special leave ought to be granted in respect of

that issue of territorial application.

MASON CJ:	Mr Gibson, could I bring you back to section 56?
MR GIBSON:	Yes.
MASON CJ:	Is the lending right secured by the contract?
MR GIBSON:	We would adopt Their Honours reasoning in that

regard, Your Honour, and can assert that it was.

Their Honours again resolved this issue in favour of the applicant - - -

MASON CJ: Yes, I realize that.

MR GIBSON:  - - - and Their Honours' reasoning appears at

page 193 of the application book and clause 13.1,

which confers the exclusive right, page 106 of the	application book, in our submission is appropriate
in that context.

Finally in this context, Your Honour, the

point to which we would draw attention is the

observation in the joint judgment at page 201 from

lines 35 through to page 202 line 15, from which it

is clear that Their Honours in addressing the

question of whether a relationship, such as to give
rise to the operation of section 4(2), between the

instrument and property or anything:

to be done in Queensland -

was, in Their Honour's view, to be ascertained from

the terms of the instrument alone and without

Westpac 10 5/2/93

regard to any other circumstances.	At the foot of
page 201, Their Honours say:

But that, even if stated -

that is a reference to an assertion in the case

stated -

could not be enough; the deemed instrument

does not refer expressly or implicitly to this State, nor depend for its effectiveness
on the doing of anything in this State.

Your Honours, suffice it to say, in our

submission, that that cannot be correct, that to so
conclude is, as we have said in our outline at

paragraph 15, to ignore the powers of the

Commissioner under section 22 and 23 of the Act to

make inquiries, to go behind the form of an

agreement, and to ascertain the true facts.

Therefore, in our submission, the

circumstance, if it be a circumstance, that an

agreement does not on its face reveal the necessary

connection, is beside the point if such a

connection, upon investigation, is found to exist,

and that error, it would appear, contributed, and

contributed materially, to Their Honours' erroneous

conclusion that the necessary connection was not

demonstrated. The error of the conclusion being

revealed by the matters, both in the case stated

and in the agreement to which I have referred.

TOOHEY J:	Mr Gibson, where precisely do you say the connection is to be found?
MR GIBSON:	It is to be found in the provisions of the

agreement identified at paragraph 16 of our

outline, Your Honour.

TOOHEY J:  I ask that because of the statements released by

the joint members of the Court that it was not

clear to them on what basis the Commissioner

contended the document to be dutiable.

MR GIBSON:  Yes, we noted that and I am unable to assist

Your Honour with any elucidation of what may have

been in Their Honours' minds. As I have submitted,

clauses 13, 11 and clause 1 of the agreement,

together with the contents of paragraph 10 of the

case stated, show that there is, in fact, a
relationship between the instrument and the State
of Queensland because, putting it in a nutshell,

the agreement contained, or the promise contained in clause 13, which is to confer upon Westpac the exclusive right to provide a part of any subsidized

Westpac 11 5/2/93

advance and other benefits upon which the subsidy

is payable, et cetera, relates, unavoidably to

portfolio assets, some of which are situated in

Queensland.

The other matter to which I wish to draw

attention is that the application for special leave

refers to a third ground and that is as to the

meaning of section 54(4) of the Stamp Act concerned

with the construction of the words "memorandum of

association" where it appears in the Act. we do

not wish to advance any submissions in support of

that. Those are our submissions. If it please

Your Honours.

MASON CJ: Mr Ellicott? Mr Ellicott, we need not trouble you on section 54(1) but we do want to hear from you on section 4(2).

MR ELLICOTT:  Your Honours, their reliance on section 4 ( 2)

is dependent on section 56, as we understand	it.
They have real difficulties with section 56.	They
have the same difficulties, for a start, as

Your Honours have pointed out in section 54. But quite apart from that, if one looks at the words of

section 56, and although I know that the court

below has found against us on this, they have real
problems on an appeal, in our submission, with the

application of Yeend's case and whether there is

any property interest that is the subject of this
arrangement.

The very first words of section 56 require

that there be a sale, and if there is no sale under section 54 then we would submit that there could be no sale under section 56. That is to say that you

cannot have a sale unless there is, as section 54

itself implicitly is saying, there is some

agreement to transfer property by a conveyance or

other acknowledged method. That did not happen in

this case, as is clear.

Here the Commonwealth, for obvious reasons,

had decided that it would not follow the course of

a sale, those obvious reasons being that they were
indeed changing the whole basis of their

arrangements with the Defence Home Assistance

Provisions and it had to go to Parliament. It

could not operate by way of a sale between the

Corporation and the bank. So they had to go the

only way they could go and that was to say, "We'll

put a bill up to Parliament and if it is passed

certain things will happen". But those things that

would happen, they did not happen as a sale, they

just happened as the consequence of the bill being

passed and the agreement being approved, as it was

under the Defence Home Assistance Amendment Act.

Westpac 12 5/2/93

The Act itself and the parties, of course, had

the draft bill attached to the agreement.	The Act
itself does approve the agreement.	So that in

every sense of the word there is an initial

difficulty in this for them to establish that there

could be the sale of any other right. I mentioned

Yeend's case only for the reason that although

there is a decision against us, Yeend's case, we

would submit, is quite clearly saying that that

right, it has been there for a long time, has to be

a right in the nature of property.

These rights under the clauses in this

agreement to pay a subsidy or for a so-called

franchise, those rights are not rights of property~

They are purely contractual. So right at the

beginning they have these definite barriers to

overcome that would emerge on any appeal before the

Court.

So far as section 4(2) is concerned, that is a

well-known provision. There are similar provisions
which pick up those words in the Stamp Duties Acts

of the various States and territories. The

because of the difficulties that they have with apportionment, that they are entitled to duty on the whole of the consideration. That is to say, they are entitled to duty on the 1.5 billion

significant thing, of course here, and I assume the submitting,

approximately, which is around $55,000,000. And,

if they are right on this, then all the States and

territories are entitled to 55 if they have similar

rates, and the result is, of course, that the

Commonwealth is somewhat - or the bank is behind

the eight ball so far as $440,000,000 is concerned.

So, that is the implication of this, and I just

want to point that out. But, in saying that, we
would submit that section 4(2), because of its

origin in cases that go back to Barcelo's case and

Broken Hill South and other cases that Your Honours

will be familiar with, can have no other purpose.

Having started in section 4(1) by saying:

Stamp duty shall be charged for the use

of Her Majesty upon the several instruments

specified ..... in the First Schedule -

in subsection (2) it is providing, we would say,

explicitly, but certainly impliedly, the

territorial limitation, and in that respect the

Court of Appeal was correct, in our submission, and

clearly correct, and there is no basis upon which

one can properly, we would say at this stage in our

history, challenge that, because that is the basis

upon which the stamp law of Australia has been

administered for many, many years.

Westpac 13 5/2/93

So, it has to be property situate or it has to

be in relation to a matter or thing done or to be

done in Queensland. Now there is nothing in this

agreement which, in our submission, relates to

property situated in Queensland, in the relevant

sense, because there is nothing on the face of the

agreement that operates in relation to - that is
assuming, of course, it is an agreement - there is

nothing in it that relates to property situated in

Queensland, and here I am talking about the franchise. There is nothing there which assumes

that subsidies necessarily are going to be given in

relation to property situated in Queensland or,

alternatively, that Westpac is necessarily going to

exercise rights in relation to things, that is

property, located in Queensland.

MASON CJ:  Can you just explain to me how the lending right

works in relation to the subsidy scheme,

clause 11.1, and bearing in mind what is recited in
paragraph 10 of the stated case, namely that the

Corporation held mortgages and contracts of sale in

Queensland?

MR ELLICOTT:  Your Honours, under clause 11.1 at page 84, we

do not dispute that there may well be specified

portfolio assets that exist in Queensland, and we

do not dispute that subsidized advances may be made

by the bank in relation to defence personnel who

will be stationed in Queensland and the advance
will relate to property situate in Queensland.

But this is not an agreement about giving loans or making subsidized advances, this is an

agreement to subsidize Westpac if it does certain

things, or if it makes subsidized advances, and the
things that Westpac has to do and the Commonwealth

have to do are all done outside Queenland, and

going through the obvious things first, the

agreements executed outside Queensland, the funds

that are paid - the subsidies - are paid into a

bank account that is outside Queensland, and there

is no reference on the face of the agreement to

anything having to be done in Queensland in

relation to either continuing with specified

portfolio assets or subsidize advances because

Westpac, in our submission, is not bound to do

these things. If it does not, then it can be

called to account, but that is a different matter.

This is an agreement whereby the Commonwealth was

able to - my friend has called it privatization,

but whatever is the proper description Westpac is

simply stepping into the shoes of the Commonwealth

through the Corporation of providing advances, and

it assumes that those advances will be made.	But
the agreement itself is an agreement to pay a
subsidy and it is an agreement which, in due

Westpac 14 5/2/93

course, leads to Westpac, in effect, getting

whatever benefit it can get from the agreement.

But those benefits are not the essential nature of

what the parties have to do.

So, from an operative point of view it is our submission that this agreement, even if it is an

agreement for sale, in no sense has the effect of dealing with property situate in Queensland. The

words "relate to" in section 4(2)(a) are not

sufficiently satisfied simply because one can say,

"Well, this could affect property situate in

Queensland". That is not the test. It really has

to bear down on or require an obligation in

relation to property in Queensland and, in our

submission, there is no such requirement under this

agreement, and certainly there is not any mention

of property situate in Queensland.

That is a purely incidental matter. There

have been cases like ACI before Mr Justice McGarvie

in Victoria, that is the Ansett case, where the

mere incidental presence of an aircraft, for

instance, in Victoria was not enough to make it

dutiable under the Victorian Act.	The same
operates here.

So we would submit that first of all,

section 4(2) is simply a provision which is in line

with the authorities of this Court going back as

far as Barcelo's case and Broken Hill South, is

expressing what had to be found in these Stamp

Acts, that is, "What is the territorial limitation of them?" Therefore, the court was not wrong in regarding it as exclusive; and secondly, that if

it potentially applies to section 56 because there

is an agreement, it does not relate to property

situate in Queensland or anything done or to be

done in Queensland. And those words "done or to be

done" also assist in saying that the agreement

itself has to require something positive in

relation to property in Queensland, which is not

the case here.

Your Honours, one matter that needs to be

addressed and it is this: if Your Honours were

minded to give special leave on this matter

confined, one assumes, to section 4(2), then we

would submit that even though Your Honours may have

some doubt about the decision, it really is a

decision that turns on its own facts and

circumstances. It does not raise a matter of

general public importance. The meaning of

section 4(2), we would submit, is fairly well laid

down, and therefore it does not -fall within the

criteria for the grant of special leave. We would

submit that Your Honours, even if you had some

Westpac 15 5/2/93

residual doubt, notwithstanding our submissions,

should not grant special leave for that reason.

The other aspect that needs to be addressed is

this: that as I mentioned earlier, what they are
really saying, as we understand it, is that they

are entitled to - and the court below mentioned

this - they are entitled, they say, to duty of

$55 million on the total amount.

MASON CJ: Notwithstanding lack of proportionment of the

configuration.

MR ELLICOTT:  Yes. Now, if the Court goes into this the

Court surely is going to have a look at Pendal

Nominees, and Your Honour the Chief Justice's judgment in that case, and whether this question of

the franchise so-called - it may not bear that

analysis, but we will call it the

franchise - whether that is a separate and distinct

matter.

One might think, looking at the agreement,

that the Court of Appeal may well be wrong in that. If one treats it as a separate and distinct matter,

then one gets the problem again of apportionment;

it will lead to the apportionment problem. There is no basis, we would submit, in the case stated,

for making any apportionment in relation to the

franchise; no evidence whatsoever there. The

Court is bound by the case stated. It cannot refer

it off to a single judge and this Court would be

left in the position where it could give no

resolution to the matter. Your Honours, we would

submit that this is not an appropriate case for

special leave.

MASON CJ:  Mr Ellicott, what do you say about the suggestion

that duty is attracted because the agreement was

brought into Queensland?

MR ELLICOTT:  Your Honour, the agreement may be brought into

Queensland, as many non-dutiable agreements are,

but that does not make it dutiable. Once it comes

in, it has to satisfy the test: does it relate to

property, et cetera? If Your Honour pleases.

MASON CJ: Thank you. Mr Gotterson?

MR GOTTERSON: If the Court pleases, we adopt the

submissions of my learned friend, Mr Ellicott.

There is one matter that we do wish to point out, and that is that the problem of apportionment

relates not only as to whether property, that is to

say the mortgages or land, is in Queensland or how

much of them is in Queensland.

Westpac 16 5/2/93

The other problem of apportionment really

relates to how much consideration would be paid for
the franchising agreement considered as a deemed
separate agreement. If the Court were to grant
special leave on that matter only and if the Court

were to conclude that it was related in terms of

section 4(2), then still it would be faced, because

the notice of appeal asks the Court to do so, with

the problem of assessing the duty payable on the

deemed separate agreement.

The problem of consideration for the deemed

franchise agreement is dealt with at pages 193 to

194, and particularly at page 194, lines 20 to 40.

The court debates whether it might be $50 million

and then comes to the conclusion that a particular

clause that is referred to on page 194 does not

assist and then they come to the conclusion that

they:

can find nothing in the case stated which

enables the Court to fix the amount on which

ad valorem duty is to be charged with respect

to the sale of the franchise.

That is not challenged. What point, we ask, would

there be in granting special leave restricted to

the deemed franchising agreement if in the end the

Court cannot answer the question? If the Court

pleases.

MASON CJ: Thank you, Mr Gotterson. Mr Gibson?

MR GIBSON:	Thank you, Your Honours. With respect to the points addressed by Mr Ellicott, it was submitted
that if there was not a sale under section 54, then there could not be a sale under section 56.

In our submission that is entirely erroneous;

section 54, of course refers to a:

contract or agreement for sale -

of any property; section 56 refers to:

the sale of any annuity or other right not

before in existence.

The scope of operation of the provisions is quite

different. They, together with other sections in

the Act, form a scheme to which regard should be

had.

Your Honours, it was submitted that there is

no relevant relationship between the contract and

the State of Queensland so as to attract the

operation of section 4(2). In our submission, that

Westpac 17 5/2/93

is also demonstrably wrong; the subsidy to which

Westpac is entitled by the lending franchise is

expressed to be payable in respect of advances made
by Westpac in relation to property situated in

Queensland and secured by mortgages in Queensland. In the ACI Resources Limited v The Commissioner of

Stamp Duties, 86 ATC 4810 in our case list, a

judgment of Mr Justice Foster, His Honour said at

page 4814, right-hand column in the last paragraph,

that not only should regard be had to:

obligations created by events or instruments

other than the instrument in question.

But also that in the circumstances of that case -

the deed of charge -

related -

to a thing to be done in New South Wales,
because it was required to be registered in
that State although not executed in that

State, and that was sufficient to establish

the nexus.

The nexus in this case is much more direct and

apparent than that. Further -

MASON CJ: What has to be done in Queensland?

MR GIBSON: There is not necessarily anything - well there

are two aspects of the matter, Your Honour: what

will be done in Queensland is the registration of

mortgages in Queensland, mortgages by which the

advances, the subject of the lending franchise, are secured; but secondly, by inquiring as to what must

be done in Queensland, one is directing attention

to the second limb of the opening words of

section 4(2)(a), and Your Honours we would, without

abandoning that, we would prefer to ground our

submission on the opening words, which is in a case

of an instrument which relates to property situated

in Queensland, and -

TOOHEY J:	So it is clear, is it, that on this aspect of the case the applicant rests solely on section 4, in
terms of extraterritorial operation? I ask you
that for two reasons: one is that the outline in
paragraph 11 refers to the instrument being brought
into Queensland, as if that had some relevance; and
the other is that paragraph 15 of the outline is
critical of the majority, or the joint judgment, in
concluding that section 4 was definitive of the
territorial operation of the Act.  But your
argument, as I have understood it, is placed in
that regard fairly and squarely on section 4(2).

Westpac 18 5/2/93

MR GIBSON: Well, not entirely on 4(2), Your Honour; we

would submit that section 4(1) has application in

consequence of the decision in Wienholt's case.

Section 4(1) is the general charging provision

which provides that the instruments specified in

the first schedule shall be charged with duty, one

such category of instruments are conveyances and

transfers, and that the presence of the agreement

in Queensland is sufficient to render it liable to duty. We therefore put our case on the two bases:

either section 4(1) or section 4(2).

TOOHEY J:  Is that the way in which it was put to the Court

of Appeal? It does not seem to emerge from that

rather puzzled statement by the Court that appears

on page 201 to which I referred earlier.

MR GIBSON:  Yes. I am not sure that I can say, without

reservation, that it was put on that basis,

Your Honour. Certainly, as I understand it,

submissions were made in the Court of Appeal based
on Wienholt's case and, as I understand it, the

Court's attention was drawn to those provisions of the agreement to which we have drawn the Court's

attention this morning. As I said before, I am

really unable to explain the court's observations

in that regard.

I was referring briefly to the case of

Commissioners of Inland Revenue v Maple & Co

(Paris) Limited, the decision to which I have

earlier referred, and it is in this context that

Lord Macnaghten's observations, at page 26, the

penultimate paragraph, are in point.	As His Honour
there says:

The provision is not confined to the operative part of the instrument. It speaks of the instrument as "relating to" certain subjects.

There is no expression more general or

far-reaching than that. This instrument
relates to the capital of the new company, out

of which it was agreed that a specified number

of shares should be appropriated -

et cetera. Your Honours, in our submission,the

phrase "relating to" is as His Lordship said, as

general as one can envisage, and that the

relationship is satisfied by the matters to which

we have referred.

There are two brief matters to which I should

also comment. Firstly, it was submitted that this

point raises no matter of general public

importance. With respect, that cannot be so.

Section 4(2)(a) has counterparts in other

5/2/93

. Westpac 19

interstate legislation. The matter raised is

plainly, in our submission, of public importance.

It was further submitted by both Westpac and

the Commonwealth that, were special leave to be

granted, insurmountable practical difficulties

arise with respect to the question of apportionment

of the duty. With respect, that is not so. The

Commissioner has not sought the sum of $55 million

dollars by way of stamp duty. There is an

observation to that effect in the reasons of the
majority, but it is not based on submissions that

were ventilated, either to the Court of Appeal or

which we ventilate now.

In our submission, for the reasons given by

the majority, section 15(a) of the Act has the

effect that the two subject-matters of the

agreement, namely the lending franchise on the one

hand, and the sale of the portfolio assets on the

other, are each to be deemed to be separate

instruments and dutiable accordingly.

Now, it is the case that in his assessment,

which appears at page 153 of the application book,

the Commissioner relied on clause 3 of the

agreement, at page 35, to effect an apportionment

as between those two deemed instruments, and with
respect to the lending franchise, assessed duty on
the figure of $100 million appearing in

clause 3.1.1 of the agreement.

The Court of Appeal took issue with that

assessment concluding, for reasons which I need not

develop, that the material, the case stated, failed

to demonstrate that that was the appropriate sum as

representing the consideration for the lending

franchise. Their Honours went on to say that there

were difficulties in determining what duty should

be assessed, but Their Honours did not have to

decide the point.

Were special leave to be granted it is our

submission that the appropriate course to be

adopted, assuming the appeal succeeded in due

course, is that adverted to by Mr Justice Brennan

in a case, it is not in our list, of KLDE Pty. Ltd

v Commissioner of Stamp Duties, (1983) 155 CLR 289

at page 304 to 305, where His Honour said,

referring to the powers of investigation conferred

on the Commissioner by section 23, that if any

questions of fact remained outstanding then the
appropriate course was for the Court to make its
decision on the issue of law raised and to send the

case back to the Commissioner for resolution of any

outstanding questions of fact. And His Honour

referred as authority for that proposition the case

Westpac 20 5/2/93

of Mack v Commissioner of Stamp Duties (New South

Wales), (1920) 28 CLR 373 at page 381, where in the judgment of Mr Justice Isaacs His Honour said:

If, therefore, the matter depended on a

concusion of fact necessary to be arrived at

either in addition or contrary to the facts as

stated in the case, there would be no
jurisdiction in the Court to determine the

facts or to give any judgment other than to

send the case back for definite statement by

the Commissioner as to the conclusion he

arrived at.

In short, Your Honours, there is no insurmountable·

difficulty; it is a matter to be addressed at a

later time. Those are our submissions.

MASON CJ: Thank you, Mr Gibson. The Court will take a

brief adjournment to determine the course it will

take in this matter.

AT 11.30 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.32 AM:

MASON CJ: 

The Court is of opinion that the actual decision

of the Queensland Court of Appeal is not attended
with sufficient doubt to justify the grant of

special leave to appeal.  The two applications are

therefore refused.

MR ELLICOTT:  Would Your Honours make an order for costs?

MASON CJ:	Mr Gibson, I take it you do not oppose an order for costs in each application?
MR GIBSON:	No, Your Honour.

MASON CJ: Very well; the applications are refused with

costs.

AT 11.33 AM THE MATTER WAS ADJOURNED SINE DIE

Westpac 21 5/2/93