Connell v Rothwells Limited (In Liquidation)

[1994] HCATrans 349

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane Nos B58 and B59 of 1993

B e t w e e n -

LAWRENCE ROBERT CONNELL

Applicant

and

ROTHWELLS LIMITED

(In Liguidation)

Respondent

Application for special leave

to appeal

BRENNAN J
DAWSON J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 13 MAY 1994, AT 9.33 AM

Copyright in the High Court of Australia

Connell 1 13/5/94

MR E.J. LENNON, QC:  May it please Your Honours, I appear

leading MR J.D. McKENNA for the applicant.

(instructed by Clayton Utz)

MR P.A. KEANE, QC:  May it please Your Honours, I appear

leading MR J.P. KIMMINS for the respondent.

(instructed by Blake Dawson Waldron)

BRENNAN J: Yes, Mr Lennon.

MR LENNON:  The result of the Court of Appeal's decision in

this case would be that the parties executed a deed

in Western Australia which was assessed as stamp

duty in excess of $877,000. That assessment was made up of several chargeable matters within the instrument comprising the deed. One of the clauses

of the deed contained a covenant for the payment by the applicant of $12 million. The duty in relation

to that chargeable matter was about $39,000, and

that amount has been paid in Western Australia. A copy of that deed has been brought into Queensland.

It has been assessed for stamp duty at less than

$5, and that assessment has been paid.

The respondent is enforcing the deed in

proceedings in Queensland in which the copy of the deed, stamped with Queensland duty, is relied upon at an apparent saving in excess of $800,000 in

unpaid stamp duty. For the reasons in our summary

of argument, the applicant contends that the

respondent must pay both the Western Australian and

Queensland stamp duty.

In paragraphs 4 and 16 of the respondent's

summary of argument, reference is made to the

conduct of the appeal below and what was there said

on behalf of the applicant. It will shorten this

argument if I further explain our argument and, in

particular, what our argument does not entail

because, as will be seen by referring to

paragraph 5 of the respondent's summary of

argument, it is there asserted that our argument

would be contrary to a position settled in

Breavingt;on and McKain, and there reference is made

to certain passages.	We dispute the accuracy of
that assertion.

Both the cases referred to were cases which

focused on inconsistent State legislation in the

context that a law of a forum was suggested to be

displaced or overridden by the lex loci delicti.

BRENNAN J: But what is your argument, Mr Lennon? Before

you join issue with the respondent's contentions,

Connell 2 13/5/94

what is your argument which leads to the result for

which you contend?

MR LENNON:  Our argument is that because Australia is a

Federation, either by the indirect operation of

that circumstance or, alternatively, because of the

effect of section 118, by direct operation and save

where there is an inconsistent statute of the

forum, the rules of private international law of

each Australian forum give effect to the relevant

laws of other States. That is, in this case the
relevant law is the Stamp Act of Western Australia
as the lex loci contractus affecting the validity

of an unstamped document. In this case, there is

no law of the forum.

DAWSON J: That is the point, is it: affecting the validity

of the document? You say that is what the Western

Australian legislation does?

MR LENNON:  It does, and we do not have to go any further

than focus on the relationship between lex loci

contractus, invalidity by that law and the

application of the lex fori which either, by that
indirect operation, or by that direct operation of

section 118 that I referred to, reflects the

consequences of the West Australian law.

BRENNAN J:  Mr Lennon, when you say "invalidity", you mean

"unenforceability"?

MR LENNON:  As a consequence of invalidity. I do not mean

merely inadmissible; I mean invalid. I rely in

that regard on the decision of the High Court in

Dent v Moore, where specifically, in the first

instance, page 324, Mr Justice Isaacs, giving the
judgment of the Court, referred at about point 3 to

the two limbs or aspects of the relevant statute:

(1) inadmissible in evidence; and (2) not to

be available or effectual for any purpose

whatsoever at law or in equity.

Then, and this is quite important to our argument, the way His Honour rationaiizes that is to see that

the acts of the parties in executing the document
do not constitute a contract save with the sanction

of the court which gives the sanction of the law.

Therefore - and now I am looking at two-thirds of

the way down the page:

The legislature by way of securing the payment

of the impost for public purposes, which is

placed on the instrument, provides in effect

that the sanction of law shall be withheld

from the acts of the parties until the revenue

law is obeyed ..... the mere convention of the

Connell 13/5/94

parties creates no binding tie between them.

It is the law operating on their

compact ..... which creates the obligatory

relation that one can enforce against the

other.

Your Honours, in our submission, nothing could be

plainer than that that relates to validity.

DAWSON J:  I think it is plain that it does not. It merely

says that until you have paid the stamp duty on the

instrument the law does not operate upon it to give

it contractual effect.

MR LENNON: Except for the use, Your Honour, of the word

"unless". It seems that it is not, as it were, a

mere postponement that His Honour had in mind, in

other words, the notion that the contract does come into existence when the parties signed the document

and its enforceability is postponed until a

condition is met but, rather, he seems to put it

higher than that.

DAWSON J: But it is not that. There is not much point in

arguing about the words in a passage in a judgment.

The fact of the matter is that this is a revenue

law and it says to parties, "The law says you

cannot use this document until you have stamped

it". But that is not validity. It does not go to

validity.

MR LENNON:  Inadmissibility in evidence is apt to describe

"can't use it until it is stamped", but the second

limb -

not to be available or effectual for any

purpose whatsoever at law or in equity -

BRENNAN J: Yes, Mr Lennon, but Dent v Moore certainly takes

it beyond the admissibility level. It says it does

not have any effect if it is unstamped, but once

stamped it has effect as though it was stamped ab

initio. It is not a question of an executed

instrument subsequently stamped acquiring its legal

force only from the moment of stamping. The

problem in this case as I see it from your point of

view is that the Stamp Act itself may be quite

adequate to preclude enforcement under the law of

Western Australia, but has nothing to say as to the

enforceability of this instrument duly stamped with

Queensland stamp duty under the law of Queensland.

MR LENNON:  We do not contend, Your Honour, to any such

error of attempting to rewrite notionally the West

Australian statute. The West Australian statute,
if we are right about its consequence for validity,

would operate in a non-localized way. It is not

Connell 13/5/94

directed to Queensland and neither is it, expressly

or even by any necessary implication, limited to

West Australia. It speaks generally, and the

question is: it having spoken generally, will that

be given effect because in this Federation, either

by that direct or indirect method that I referred

to, you get the same answer in West Australia and

in Queensland as to its efficacy and availability.

BRENNAN J: It is accepted, I gather, that the proper law of

the contract is the law of Queensland?

MR LENNON:  Yes, we made that concession, Your Honour.

BRENNAN J: And you do.

MR LENNON:  And we do, but we argue that where you take the

law of the forum at the preliminary stage of the
analysis of a conflicts problem, you are at a

judicial stage prior to considering a proper law of

the contract. It is the law of the forum which is

affected by different considerations in a

Federation, or by directly the presence of

section 118, and the law of the forum looks at this

contract that is purportedly valid and says it is

not because there is a law of West Australia.

BRENNAN J:  I suppose there is a law of South Australia that

says the same, is there?

DAWSON J: There is certainly a law of Queensland which says

something about it.

MR LENNON:  The laws of those States would not be operating

in any way on this deed.

GAUDRON J: Queensland law surely does.

MR LENNON:  Yes, this deed must be stamped according to two

regimes if it is made dutiable. It is optional.

When the deed was executed, the parties need not

have removed it from West Australia.

GAUDRON J:  I note from the papers that it was signed in

Western Australia.	I would not have thought that
that was the beginning and end of the matter.	It
is a deed and it has to be delivered.

MR LENNON:  Yes, it might perhaps be assumed that it was

delivered in West Australia. I do not think any

point has been taken as to its not being subject to

duty.	It was submitted for assessment and was
assessed for duty.	I do not think there is any

suggestion that that duty is not payable because

the document never became a dutiable deed. So, in

our submission, when a document is executed in a

State - putting aside for the moment the additional

Connell 13/5/94

complication of suspension of dutiability if in

fact it is not an immediately effective document -

then of course it must be stamped pursuant to the

law of the State that applies at the place of

execution. Now, if a party takes the - - -

GAUDRON J:  But why would it have to be stamped there,

unless you want it to invoke its efficacy under

that law, which does not seem to me to follow

axiomatically if its proper law is somewhere else?

MR LENNON:  It has to be stamped where it is executed

because uniformly in Australia, and in particular

in Western Australia, the moment of execution makes

the document subject to duty and the parties liable

to the payment of the duty. Now, a party can then

take the document to another State if he wants to.

Whether it becomes dutiable in that State is a

matter for the local duty. If the local duty is

paid, that payment does not confer any particular

validity on the document; it merely allows the

sanction of that jurisdiction to the validity. So

in other words, there is no negative factor denying

the document validity from the point of view of

Queensland law, and you have a dual test of

validity.

BRENNAN J: What are the steps under Queensland law which

lead any person applying Queensland law to a

consideration of the operation of the

Western Australian statute? In so far as

Queensland law is concerned, there is an instrument
duly stamped under Queensland's Sta.mp Duty Act, the

proper law of which is the law of Queensland,

liability under which is to be_discharged in

Queensland. Now, what is it that requires any

reference to the law of Western Australia? What is

the principle of law in Queensland which directs

your attention to the law of Western Australia?

MR LENNON:  The law of the forum contains the requirement.

BRENNAN J:	I hear you say so, but why do you say so?
MR LENNON:	Because any question of conflict law is resolved

by the law of the forum -

BRENNAN J: Where is the conflict?

MR LENNON:  There is no inconsistency in the sense of

conflict, but there is the question of application

of the interstate law.

BRENNAN J:	Why is there?
MR LENNON:	Because in a Federation section 118 either

directly or indirectly puts into the law of the

Connell 6 13/5/94

forum as part of its conflicts, choice of law

rules, the requirement to give full faith and

credit.

DAWSON J: Yes, but section 118 is not a choice of law

provision. It does not choose anything. It just

says, in effect, that where a law is applicable it

should be applied. But it does not give you any

guide as to whether the law is applicable or not.

MR LENNON:  Your Honour, that has been said in relation to

the resolution of conflict in the sense of

acknowledge, between laws. What we are saying is

inconsistency between statutes, and indeed in

that this is more like Merwin's case where

section 118 was acknowledged as affecting the State

law of conflicts, choice of law rules. That has

been accepted by numbers of the justices now, and

how it operates is exactly the way we are saying.

It affects the way the law of the forum is applied

to resolve - and I should not use the word

"conflicts" in case it diverts you - to

resolve -

DAWSON J:  It does not resolve the question. Once it is

stamped according to Queensland law, the Queensland

law says the document is admissible and

enforceable.

MR LENNON:  We want to put that in issue. We want to say

that the Queensland law does not confer validity.

What it does, it says on payment of the stamp duty

there is no longer any objection from the point of

view of Queensland stamp duty law to the validity

of a document. But if it is invalid for any other

reason, for common law reasons or for interstate

revenue law reasons, then that invalidity is simply

not adverted to by any provision of Queensland law.

Your Honours, what has been put to me by

Your Honours for submission relates to the
authority of Dent v Moore.	It has been accepted by

intermediate appellate courts, as we have made

mention of in our written submission, that

Dent v Moore has been taken to stand for the

proposition that invalidity is the consequence of
the non-payment of stamp duty. That has been said
in the West Australian Full Court and in the

appellate jurisdictions of New South Wales.

DAWSON J:  I do not really understand the use of the word

"invalidity" but if it is invalidity, at best it is

contingent invalidity, is it not?

MR LENNON:  Yes, but that nevertheless is a circumstance

which would be taken into account. Our submission

Connell 7 13/5/94

is that these matters require to be explored. In

particular, if Dent v Moore does affect validity
rather than mere admissibility, or something of
enforceability but less than invalidity, then that

has not, with the greatest of respect, been made clear by this Court in any previous case. That

and the other points we have urged are special

leave points. Thank you, Your Honour.

BRENNAN J:  We need not trouble you, Mr Solicitor.

Without questioning the authority of Dent v Moore, the decision in this case is not attended with sufficient doubt to warrant a grant of special

leave. Accordingly, special leave is refused.

MR KEANE:	If the Court please, we ask for costs.
BRENNAN J:	Do you have anything to say about that,

Mr Lennon? Mr Lennon, do you have any objection to an order for costs? ·

MR LENNON:  I am sorry, Your Honour. I have no contrary

objection.

BRENNAN J: Yes, very well. Special leave will be refused

with costs.

AT 9.55 AM THE MATTER WAS ADJOURNED SINE DIE

Connell 13/5/94