Commissioner of State Revenue v TEC Desert Pty Ltd
[2009] WASCA 128 (S)
•23 JULY 2009
COMMISSIONER OF STATE REVENUE -v- TEC DESERT PTY LTD [2009] WASCA 128 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2009] WASCA 128 (S) | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:19/2007 | 22-23 OCTOBER 2008 | |
| Coram: | McLURE P WHEELER JA NEWNES JA | 23/07/09 | |
| 15/01/10 | |||
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Stamp duty recalculated Instrument referred to Commissioner for reconsideration | ||
| B | |||
| PDF Version |
| Parties: | COMMISSIONER OF STATE REVENUE TEC DESERT PTY LTD AGL POWER GENERATION (WA) PTY LTD |
Catchwords: | Taxation Stamp duty Recalculation of duty payable on instrument Whether trial of factual issues necessary Turns on own facts |
Legislation: | Stamp Act 1921 (WA), s 16(1), s 31, s 31AA, s 32, s 33(4), s 70, s 74, item 4(1) sch 2 |
Case References: | Metwally v University of Wollongong (1985) 59 ALJR 481 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : COMMISSIONER OF STATE REVENUE -v- TEC DESERT PTY LTD [2009] WASCA 128 (S) CORAM : McLURE P
- WHEELER JA
NEWNES JA
DECISION : 15 JANUARY 2010 FILE NO/S : CACV 19 of 2007 BETWEEN : COMMISSIONER OF STATE REVENUE
- Appellant
AND
TEC DESERT PTY LTD
First Respondent
AGL POWER GENERATION (WA) PTY LTD
Second Respondent
(Page 2)
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : SIMMONDS J
Citation : TEC DESERT PTY LTD & ANOR -v- COMMISSIONER OF STATE REVENUE [2006] WASC 300
File No : SJA 1178 of 2001
Catchwords:
Taxation - Stamp duty - Recalculation of duty payable on instrument - Whether trial of factual issues necessary - Turns on own facts
Legislation:
Stamp Act 1921 (WA), s 16(1), s 31, s 31AA, s 32, s 33(4), s 70, s 74, item 4(1) sch 2
Result:
Stamp duty recalculated
Instrument referred to Commissioner for reconsideration
Category: B
Representation:
Counsel:
Appellant : Mr B P King & Ms I Briggs
First Respondent : Mr J W de Wijn QC & Mr B Dharmananda
Second Respondent : Mr J W de Wijn QC & Mr B Dharmananda
Solicitors:
Appellant : State Solicitor for Western Australia
First Respondent : Mallesons Stephen Jaques
Second Respondent : Mallesons Stephen Jaques
- <SolicitorList Name1="State Solicitor for Western Australia", Type1="Appellant", Name2="Mallesons Stephen Jaques", Type2="First Respondent", Name3="Mallesons Stephen Jaques", Type3="Second Respondent",>
<CounselList Name1="Mr B P King & Ms I Briggs", Type1="Appellant", Name2="Mr J W de Wijn QC & Mr B Dharmananda", Type2="First Respondent", Name3="Mr J W de Wijn QC & Mr B Dharmananda", Type3="Second Respondent",>
Case(s) referred to in judgment(s):
Metwally v University of Wollongong (1985) 59 ALJR 481
(Page 4)
1 McLURE P: I agree with Wheeler JA that the orders she proposes are consistent with the respondent's conduct of the appeals and give effect to her reasons in this appeal.
WHEELER JA:
A dispute about orders
2 Reasons for decision in this appeal were delivered on 23 July 2009. An issue arose concerning the appropriate orders which the court should make for giving effect to those reasons. A timetable was set for the parties to make written submissions in relation to appropriate orders. The last of the written submissions was received on 25 September 2009.
3 It can be seen from a reading of the reasons delivered on 23 July 2009 that two issues concerning relief would appear to arise. The first is a relatively simple matter of calculation, applying the appropriate rate under the Stamp Act 1921 (WA) (the Act) to arrive at a sum of duty chargeable. The second, which appears from [141] of my reasons, relates to an apparent inconsistency between s 31AA and s 33(4) of the Act. I suggested that it was not entirely clear whether the appropriate course would be for the court itself to assess the amount of duty payable, or whether the appropriate course would be to order the Commissioner to do so. That last issue has not been dealt with by the parties. Rather, the dispute between them about the appropriate orders concerns altogether different matters.
4 TEC submits that there should be a further trial, at which the court should assess the duty chargeable pursuant to s 33(4) of the Act. It is suggested that a further trial would deal with three issues. They are:
(1) whether any of the items of property agreed to be sold are fixtures, and, if so, which of those assets;
(2) whether some assets such as intellectual property or stock in trade are transferred by the Sale Agreement (it being contended that, if so, the value of those items should be excluded for the purposes of calculation); and
(3) what is the "unencumbered value" of the interests and items which are properly chargeable with duty.
5 The Commissioner, however, submits that the court should order that duty be assessed at a sum which is set out in a minute filed on his behalf.
(Page 5)
Relevant principle
6 The principle governing the present dispute is, in my view, that enunciated by the High Court in Metwally v University of Wollongong (1985) 59 ALJR 481. In that case, the question of the retrospective operation of the Racial Discrimination Amendment Act 1983 (Cth) had been removed to the High Court from proceedings between the parties in the Court of Appeal of New South Wales. The order made by the High Court presumed the validity of the Racial Discrimination Act 1975 (Cth). After delivery of judgment in the High Court, the applicant applied to vary the order and to argue the constitutional validity of the Racial Discrimination Act. The court noted that the proposition that the Racial Discrimination Act was valid was legally indispensable to the conclusion reached by the court. It was necessary to consider the alleged inconsistency between a State law and a Commonwealth law only if the Commonwealth law was valid. The court noted that Mr Metwally had been represented by competent counsel and that it was not a case in which an order had been made by mistake or as a result of fraud. The broad principle which the court enunciated at 483 was:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ).
7 In order to apply the principle enunciated in Metwally, it is necessary to outline, briefly, the way in which the issues in the appeal developed.
Assessment to duty, objection and appeals
8 On 24 July 2000, the Commissioner issued an assessment in the sum of a little over $9 million on the Sale Agreement. TEC then had a period of 42 days, pursuant to s 32 of the Act, to object to the assessment. By letter dated 31 August 2000, TEC objected to the assessment. The grounds of the objection were as follows:
1. There was not any relevant transfer of:-
a) land or any interest in land; or
b) any fixture or fixtures
from WMC Resources Ltd to the Objector.
(Page 6)
- 2. In the event that there has been the transfer of a fixture or fixtures, which is not admitted, such a fixture does not constitute an interest in land.
3. The Commissioner was not entitled to treat the Agreement as an agreement for the sale of property consisting in whole or in part of land or an interest in land.
4. Further or in the alternative to paragraph 3, the Commissioner was not entitled to treat the Agreement as an agreement for the sale of property consisting in whole or in part of land or an interest in land:
(i) for a consideration of $193,363,990, $188,566,404, or any other sum; or
(ii) with an unencumbered value of $193,363,990, $188,566,404 or any other sum.
5. In determining whether or not the Agreement was an agreement for the sale of property consisting in whole or in part of land or an interest in land, the Commissioner was obliged to have regard to the provisions of clause 3.4 of the Agreement, and was not at liberty to disregard those provisions. The effect of those provisions was to make it clear that the Agreement was not an agreement for the sale of property consisting in whole or in part of land or an interest in land.
6. Section 70 of the Act does not apply to the Agreement or to the transaction evidenced [or] recorded by the Agreement.
7. Neither the Agreement nor the transactions evidenced or recorded by it are shams.
8. The Assessment is not supported by the doctrine of fiscal nullity or any other similar common law doctrine.
9. The amount of duty set out in the Assessment is incorrect and the amount should be nil or a lesser amount than the total of $9,378,356.95.
10. The amount shown under the heading "Value" in the first item of the Assessment is incorrect and should be nil or some lesser amount than $188,506,404.
11. The Assessment is incorrect.
12. The Assessment should be wholly set aside.
13. Alternatively, the Assessment should be reduced by the amount of $9,140,280.25, or some other amount.
(Page 7)
- 14. The Assessment is arbitrary, capricious and of no legal effect, or is based upon a mistaken or inadequate understanding of the relevant facts or law, or takes into account matters that ought not to have been taken into account, or does not take into account matters that ought to have been taken into account.
15. Without limiting the generality of the foregoing, the Commissioner was not authorised, required or entitled by any provision(s) of the Act to issue the Assessment.
9 It can be seen that the first five grounds are concerned with the question of whether any provisions of the Sale Agreement transferred land or any interest in land. Item 6 specifically raised s 70 of the Act. Items 7 and 8 can now be disregarded. Items 11 through to 15 inclusive all appear to be "kitchen sink" provisions, leaving it open to TEC to raise any matter which it subsequently might consider relevant. Items 9 and 10, however, specifically raise the question of the amount of the duty and the value of the property transferred by the Sale Agreement.
10 In answer to that objection, and disallowing it, the Commissioner advised, by letter dated 3 November 2000, that stamp duty had been assessed on the sale of assets considered to be fixtures. Although it is not as clear as it might have been, it seems to have been accepted on both sides that, at that time, the Commissioner had assessed the Sale Agreement to duty on the basis that many of the items contained in the list of "assumed Sale Assets" were fixtures. By letter dated 5 December 2000, TEC advised that it was dissatisfied with the Commissioner's decision on the objection and asked that the objection be treated as an appeal. The Commissioner then made an amended Commissioner's statement.
11 The amended Commissioner's statement dated 22 February 2002 makes it clear that the Commissioner assessed the Sale Agreement to duty on the basis that it was an agreement for the sale of the assumed Sale Assets and that the assumed Sale Assets were, with the exception of items (j), (k) and (l) of the definition of "Sale Assets", fixtures. The statement also makes it clear that the Commissioner relied upon s 16(1), s 31, s 74 and item 4(1) of the second schedule of the Act and did not, at that time, contend that the Sale Agreement should be assessed on any alternative basis.
12 The questions which the Commissioner considered would be required to be determined on the appeal were:
(Page 8)
- (a) Was the [Commissioner] correct in assessing the Sale Agreement as a conveyance of land or an interest in land or fixtures.
(b) If no to (a) on what basis should the Sale Agreement be assessed to duty?
(c) If yes to (a) which of the Generation and Transmission Assets were conveyed by WMC to Southern Cross Energy.
(d) Which of the Generation and Transmission Assets conveyed (if any) were fixtures.
(e) What is the correct interpretation to be given to clause 3.4 of the Sale Agreement, and was the [Commissioner] bound to give effect to such a provision.
(f) How shall the costs of the appeal be borne and paid?
13 The term "Generation and Transmission Assets" was defined elsewhere in the Commissioner's statement as being the assets listed in pars (a) to (h) in the definition of "Sale Assets". That definition expressly excluded those items which the parties had classified by agreement as "Fixtures" (the classified Fixtures). Simmonds J noted that the trial before him did not extend to question (d) and that, for the purpose of answering the questions before him, it was accepted by the parties that the Sale Assets (and therefore the Generation and Transmission Assets) comprised one or more chattels and also comprised one or more fixtures (reasons [197] - [198]).
14 By written submissions dated 19 October 2005 (prior to the trial before Simmonds J, which began on 21 November 2005), the Commissioner expressly sought to rely upon s 70(2) and (3) of the Act. That is, the Commissioner made it clear that he was seeking, as an alternative basis for assessment, to rely on an ability to aggregate the value of the fixtures (which he regarded as an interest in land) and chattels, so as to assess duty on the aggregate value of the land and chattels transferred by the instrument pursuant to item 4 of the second schedule of the Act. The submissions noted that, prior to execution of the Sale Agreement, TEC had prepared a schedule identifying items which they considered to be Fixtures (classified Fixtures) and items they considered to be chattels (assumed Sale Assets) and ascribing a value to each item. The Commissioner's submissions set out the total value of the classified Fixtures and of the assumed Sale Assets. Relying upon s 70, the Commissioner's submissions set out a number of alternative calculations, one of which was based on the assumption that TEC had purchased not only the assumed Sale Assets, but also the classified Fixtures. That is the
(Page 9)
- amount which (leaving aside a concession made by the Commissioner in relation to motor vehicles) the Commissioner now contends should form the basis of the assessment which should be ordered by the court.
15 Before Simmonds J, senior counsel for TEC objected to his Honour considering an aspect of s 70, but nevertheless made submissions concerning the effect of that provision (reasons [171] - [174]). His Honour dealt at some length with the effect of s 70 in his reasons, and it was plainly a live issue in this court for the purposes of the appeal. TEC must have understood it to be a live issue, since TEC's notice of contention in the appeal referred to s 70.
16 Against that background, I turn to the three issues which TEC submits require a further trial before final orders quantifying the assessment can be made.
Issue (1): Whether any items were fixtures
17 The only order relevant to this issue which TEC contends should be made is TEC's proposed order 4 on its minute dated 23 July 2009. That reads:
4. The Respondents pay the Appellant the sum of $11,159,505.00 together with the interest on the amount refunded to the Respondents in appeal SJA 1178 of 2001.
18 Question 19(d) appears at [12] of these reasons. As I have noted, the term "Generation and Transmission Assets" was defined so as to exclude the classified Fixtures. The matter which the parties agreed to assume, with TEC reserving the right to assert the contrary at a later stage, was whether any of these items, which were not classified Fixtures, were in fact fixtures.
19 A trial of the issue outlined in question 19(d) would have been necessary if this court had held that the Sale Agreement was to be assessed to duty only on the basis that it was an agreement to sell the assumed sale assets. However, it was held to be assessable also on the basis that it operated as an agreement to sell the classified Fixtures (reasons [50] - [57], [74] - [83], [195] - [201]).
20 No issue was raised anywhere in the proceedings about whether those assets which the parties to the Sale Agreement had defined as "Fixtures" were in fact fixtures. It is plain from a reading of the reasons of Simmonds J that he proceeded on the basis that all parties to the appeal impliedly accepted that those items which were in the Sale Agreement
(Page 10)
- classified as "Fixtures" were indeed to be regarded as fixtures at law. At [198] he noted the assumption that, for the purposes of his deliberations, the assumed Sale Assets comprised at least one or more chattels, and at least one or more fixtures. If it had not been for the latter part of that assumption, the question concerning the proper interpretation of those provisions dealing with the disposition of the assumed Sale Assets would have been hypothetical. No such assumption was recorded in relation to those items which were classified inter partes as Fixtures. His Honour considered the questions of whether the appellant had agreed to purchase the classified Fixtures by reason of a variety of provisions in the Licence Agreements, and of whether the sale of a fixture, in situ, was a disposition of an estate or interest in land. That consideration was necessary only on the assumption that these questions had some relevance to the proceedings before him - that is, on the assumption that the classified Fixtures were indeed fixtures.
21 On appeal to this court, TEC filed a notice of contention asserting that cl 17.5 of the Licence Agreements, providing for the transfer of the classified Fixtures, was not an agreement to transfer an estate or interest in land. It was not put in the notice of contention that any of the classified Fixtures were not to be regarded as fixtures. No such proposition found its way into the written submissions, or was hinted at in the oral submissions. Instead, it was argued that an agreement to sell unsevered fixtures is not an agreement to sell an interest in land, or, alternatively, that the classified Fixtures were attached to Crown land and were not separately transferable. Those arguments were understandable only on the basis of an assumption that the classified Fixtures were indeed to be regarded as fixtures. It is not an assumption from which TEC should, at this late stage, be permitted to resile.
22 In any event, I would note that, factually, the absence of any issue concerning the status of the classified Fixtures was, no doubt, because it would have been blindingly obvious that some of them at least were fixtures. They include, for example, items described as "earthworks, slab and structure" with a value of approximately $1.6 million and a power station building with a value of over $2.8 million, as well as other buildings, fencing and the like. While it is always possible to imagine cases in which even items such as significant buildings will not be fixtures, items of that kind are generally regarded as the clearest examples of items which constitute fixtures at common law.
(Page 11)
Issues (2) and (3): are some items to be excluded for calculation purposes, and valuation issues
23 It is asserted by TEC that the Sale Assets include, on any view, items which are neither fixtures nor chattels and that s 70 of the Act provides for the aggregation only of the value of land and chattels. It is asserted that an agreement to sell intellectual property is exempt from duty, as property locally situated out of Western Australia, and it is noted that, pursuant to s 70, some chattels are exempt from duty. It is therefore asserted that, in order to determine the duty properly payable, it will be necessary to identify the items to be aggregated pursuant to s 70(2). It is asserted that it will then be necessary to determine an "unencumbered" value for them. TEC suggests that these questions remain live because of the Commissioner's "late reliance" on s 70.
24 As the above history of these proceedings demonstrates, however, the reliance upon s 70 was not "late" so far as the appeal was concerned. It was raised a month prior to trial. While some objection to that reliance on s 70 seems to have been taken before Simmonds J, his Honour went on to consider its proper construction and applicability. There was no notice of contention in the appeal suggesting that his Honour should not have done so.
25 Before this court, senior counsel for TEC stated that it was not until very shortly before the trial before Simmonds J that the Commissioner sought to rely upon s 70 in order to increase his original assessment, but described that as "simply a little bit of the history" (ts 6, 23 October 2008). In relation to the alternative approach to assessment based upon s 70, senior counsel for TEC told the court, "I'm not complaining - well I'm complaining about it but it's not going to do me any good, but I'm only mentioning it to explain the history of the matter" (ts 8, 23 October 2008).
26 The written submissions of the Commissioner in this appeal from Simmonds J, at par 70, repeated the contention which had been made before his Honour that the duty chargeable should be assessed on the value ascribed in the Sale Agreement to the classified Fixtures and the assumed Sale Assets. Those submissions were dated 20 March 2007. TEC's written submissions dated 15 May 2007 contest issues of principle, concerning the proper construction of the Sale Agreement and the legal effect of an agreement to sell an unsevered fixture, but do not take issue with the Commissioner's calculations. In particular, neither in the written nor the oral submissions was it suggested that there might be assets which were neither chattels nor fixtures, the value of which might need to be
(Page 12)
- deducted from the value of the assets sold, for the purpose of assessing duty. Simmonds J appears to have been alert to this possibility, but noted that no argument was addressed to him concerning the assessability to duty of agreements to sell assets which appeared to be neither chattels nor fixtures (reasons [302] - [304]). If TEC had wished to take issue with the Commissioner's assumption that duty could be assessed by having regard to the aggregate value ascribed by the parties to the Sale Agreement to assumed Sale Assets and the classified Fixtures, it should have done so at some stage during the course of these proceedings. It neither sought to take issue with that assumption, nor to reserve its position in relation to it.
27 So far as the "unencumbered value" issue is concerned, as I have noted, senior counsel for TEC referred to s 70 on a number of occasions during the course of oral submissions. He referred to its relationship with item 4 of the second schedule of the Act, and specifically noted that item 4 levied rates of duty on the "consideration" for a sale (ts 73 - 74, 22 October 2008). However, at no point did counsel either make or foreshadow any submission that if TEC's contentions were rejected, then the Commissioner was in error in relying upon the value of the consideration agreed between the parties, for the purpose of assessing stamp duty.
28 Neither of the two questions which I have numbered (2) or (3) having been raised, foreshadowed or reserved at any earlier time, it seems to me that it is now too late for TEC to contend that the Commissioner would be in error if he relied upon the consideration agreed by the parties in relation to the Sale Assets and the classified Fixtures for the purpose of assessing duty payable on the Sale Agreement.
29 Further, so far as the "unencumbered value" issue is concerned, although s 70 does refer to that concept, in relation to both land and chattels, it does not specify a rate of duty. It is item 4 of the second schedule which specifies the rate of duty and does so, as I have noted, by reference to the "amount or value of the consideration". It is, in the ordinary case, the consideration rather than the "value" to which the Commissioner is required to have regard when calculating the duty payable. The "unencumbered value" of a chattel or land would, however, be relevant where the consideration agreed by the parties was inadequate. In those circumstances, s 75(2) would operate in effect to deem the unencumbered value to be the consideration paid. However, it is not suggested in the present case that the consideration was inadequate, or that s 75(2) is applicable. I note in this connection that all the facts and circumstances affecting not only liability of an instrument to duty, but the
(Page 13)
- amount of duty with which any instrument is chargeable, are to be fully and truly set forth in the instrument (s 26). If there were any difference between the unencumbered value of the assets and the consideration paid, it would have been the duty of TEC to set out that matter in the instrument. It is not suggested that TEC has either deliberately or inadvertently failed to do so.
30 The only issue which was agreed before Simmonds J to be a matter which might require further classification of the assets sold, rather than a simple calculation of their value, was that relating to the question of whether the Sale Agreement includes a sale of chattels which are "exempt chattels". TEC in its written submissions concerning the appropriate orders does not descend to particularity in identifying any exempt chattels, or in ascribing a value to them. Rather, it is simply asserted that because some chattels are exempt pursuant to s 70, "it cannot be assumed that the whole of the purchase price under the Sale Agreement is the value of the property properly the subject of ad valorem conveyance on sale duty" (par 22 of the respondents' submissions dated 6 August 2009).
31 The Commissioner asserts in his submissions dated 3 September 2009 that the only chattels exempt from the application of s 70 would be the motor vehicles, which have a total value of $707,341 (par 46). TEC, in its submissions in reply to the Commissioner's written submissions (dated 24 September 2009) does not take issue with that assertion. Nor, apart from reiterating the submission that there should be a trial of the various issues identified by TEC, did TEC take issue with the detail of the Commissioner's calculations.
Conclusion
32 In my view, it is appropriate for this court to "assess the duty chargeable" pursuant to s 33(4) of the Act in the following way:
|
| 190,363,990.00 |
| • |
| 707,341.00 |
| • |
| 39,836,010.00 |
| • |
| $229,492,659.00 |
(Page 14)
33 The total duty payable on that amount would be $11,125,200.95, plus $5 each payable on the two duplicate agreements submitted; a total of $11,125,210.95. Pursuant to s 33(4)(b), the court should determine that the Sale Agreement has been charged with insufficient duty, and order the Commissioner to reassess it pursuant to s 31AA, consistently with these reasons.
34 The formal order would simply be that the court declares that the Sale Agreement has been charged with insufficient duty and directs the Commissioner to reconsider the amount of duty chargeable in accordance with these reasons.
35 The Commissioner also seeks an order that TEC repay the interest paid by the Commissioner to TEC, by order of Simmonds J, on the amount refunded in Appeal SJA 1178 of 2001. No issue is taken with that part of the contested order, and I would make the order accordingly.
36 NEWNES JA: I agree with Wheeler JA.
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