Commissioner of Taxation v Chase AMP Bank Ltd

[1992] FCA 108

Re: COMMISSIONER OF TAXATION
And: CHASE AMP BANK LIMITED
No. G634 of 1991
FED No. 108
Taxes - Banks
(1992) 92 ATC 4146
(1992) 23 ATR 127

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont(1), Wilcox(1) and O'Loughlin(1) JJ.

CATCHWORDS

Taxes (Non-Income) - objection by Bank to assessment to tax by Debits Tax Act 1982 - Bank provided Building Society with facility whereby Bank honoured cheques signed by members of Society drawing on account in name of Society - s.3(1) Debits Tax Administration Act 1982 - definition of "account" - definition of "cheque" - whether cheques drawn "by or on behalf of the account holder".

Banks - objection by Bank to assessment to tax by Debits Tax Act 1982 - Bank provided Building Society with facility whereby Bank honoured cheques signed by members of Society drawing on account in name of Society - s.3(1) Debits Tax Administration Act 1982 - definition of "account" - definition of "cheque" - whether cheques drawn "by or on behalf of the account holder".

HEARING

SYDNEY

#DATE 13:3:1992

Counsel and Solicitors Mr R.B.S. Macfarlan QC with
for Appellant Mr S.W. Gibb and Mr D.M.

Mendelssohn instructed by Australian Government Solicitor

Counsel and Solicitors Mr D.F. Jackson QC with Mr
for Respondent: B.J. Sullivan instructed by

Corrs Chambers Westgarth

ORDER

Appeal allowed with costs.

The orders made at first instance setting aside the decision of the Commissioner are set aside; in lieu thereof order that the decision of the Commissioner disallowing the Bank's objection to the assessment be affirmed; further order that the respondent pay the costs of the Commissioner at first instance.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This appeal raises similar questions to the appeal in the Commonwealth Bank matter which was argued at the same time. The decision of Gummow J. is reported at 91 ATC 4,805. Again, a cheque facility was involved.

1. By a "Member Cheque Facility Agreement" ("the facility agreement") dated 31 July 1987 made between the respondent, Chase AMP Bank Limited ("the Bank"), and Metropolitan Permanent Building Society ("the Society"), it was recited that the Society wished "to make available to its appropriate Members a facility for the drawing of cheques to be met from funds standing to the credit of their accounts with the Society"; and that the Bank agreed "to provide a Member Cheque Facility for the Society and its Members...". The objective of the Bank and the Society in entering into the agreement was stated to be "to permit the Members of the Society to draw cheques on the Bank, to be met from funds standing to the credit of the Members' accounts with the Society" (cl. 1.1). The Society was to require any Member wishing to use the Member's Cheque Facility to complete an application to the satisfaction of the Society (cl. 2.1). When accepted by the Society, each application would constitute an agreement between the Members, the Society and the Bank which would, inter alia: (a) authorise the member to draw Member cheques on the Society's Settlement Account, to the extent of the funds available in the Member's Society Account; (b) authorise the Bank to debit the Society's Settlement Account with the amount of Member cheques; and (c) authorise the Society to transfer funds to meet the member cheques drawn by the member from the Member's Society Account to the Society's Settlement Account (cl. 2.5). Provision was made in the facility agreement for procedures to carry out these arrangements. For instance, by cl. 6.2 (as varied by a deed of variation between the Bank and the Society dated 1 November 1988), it was provided that the Society would, throughout the term of the agreement (a) maintain on deposit in the Society's Settlement Account an amount at least equal to (i) the expected daily value of the Member Cheques to be presented (which would be reviewed on a daily basis); or (ii) $100,000 - whichever was the greater; and (b) lodge with the Bank an amount at least equal in value to 7-1/2% of the aggregate value of Authorised Members' Deposits.

2. Although the provisions of this agreement were expressed in language somewhat different from the Facility agreement in the Commonwealth Bank case, the essential thrust of the two agreements was similar.

3. As Gummow J. noted, this matter raised the same point of principle, essentially one of statutory construction, as the Commonwealth Bank case. For the reasons we gave in that matter, we are of the opinion that, here also, the appeal should be allowed, with costs. We further order that the orders made at first instance be set aside; and that, in lieu thereof, the decision of the Commissioner, disallowing the Bank's objection to the assessment, be affirmed.