Dadeeton Pty Ltd v Commissioner of State Taxation

[2004] SASC 88

DADEETON PTY LTD v COMMISSIONER OF STATE TAXATION
[2004] SASC 88

Full Court:  Mullighan, Debelle and Gray JJ

1. MULLIGHAN J.                I agree that the appeal should be allowed for the reasons given by Debelle J and I agree with the orders which he proposes.

2. DEBELLE J.        This is an appeal from a judge of this Court upholding an assessment for stamp duty. 

3. The issues in the appeal stem from the transfer of an interest in an authority to fish for abalone issued pursuant to the terms of the Fisheries Act 1982. The transfer was made pursuant to orders of Lander J made on 10 August 2000. Lander J had heard an action for breach of trust. The transfer of the abalone authority to Dadeeton Pty Ltd (“Dadeeton”) was one of the orders made by Lander J to remedy the breach of trust. Further details of that action are set out in the reasons below.

4. The instrument by which the transfer was effected was an application to transfer the abalone authority.  The Director of Fisheries consented to the transfer.  The Commissioner of State Taxation (“the Commissioner”) assessed the application as chargeable with duty under the Stamp Duties Act 1923. For the purpose of that assessment, he determined that the application to transfer was a conveyance of property within the meaning of the Act. The Commissioner determined that the value of the abalone authority was $4 million. He assessed that the application was liable for duty in the sum of $191,330.

5. Dadeeton objected to the assessment pursuant to s 82 of the Taxation Administration Act 1996. The Treasurer, acting pursuant to the powers vested in him by the Taxation Administration Act, approved the assessment. Dadeeton appealed to this Court pursuant to s 92 of the Taxation Administration Act.  The appeal was heard by Doyle CJ who dismissed the appeal.  Dadeeton now appeals to this Court.

6. As initially argued, the appeal was essentially limited to one issue, namely, whether the application was a conveyance inter vivos liable for duty under s 71(3) of the Stamp Duties Act.

7. One of the grounds of appeal before Doyle CJ was that the application to transfer the abalone authority fell within s 71(5)(d) of the Stamp Duties Act. That ground was not successful. Dadeeton did not rely on that ground when the appeal was first argued in this Full Court. After it had considered the issues on the appeal as initially argued, the Court reconvened and asked Dadeeton whether it wished to amend its notice of appeal to include that ground. Dadeeton applied to amend its notice of appeal to add a ground that the Chief Justice had erred in holding that it was not entitled to rely on s 71(5)(d). Leave was granted to amend and the parties later presented written submissions on that issue. There is, therefore, a second issue, namely, whether the application falls within s 71(5)(d).

   The Factual Background

8. In order to understand the issues on the appeal, it is necessary to have an understanding of the facts in the action determined by Lander J, of His Honour’s reasons for judgment, and of the orders on 10 August 2000.  The reasons of Lander J are part of the agreed facts.  The Commissioner does not dispute the facts as found or the orders which were made.  The dispute between Dadeeton and the Commissioner turns on the different manner in which each interprets the effect of the orders and the application of the relevant provisions of the Stamp Duties Act to those orders.

9. The action which Lander J tried concerned arrangements made between the Edmunds family and Mr Pickering in relation to fishing for abalone.

10. Mr Edmunds held an authority to fish for abalone.  Such an authority is sometimes called a licence.  In these reasons, I will refer to it as an “abalone authority”.  Mr Edmunds became interested in acquiring a second abalone authority.  In May 1980 he learned that a Mr Rodney Fox was willing to transfer his abalone authority.

11. On 14 February 1980 the Cliff Edmunds Family Trust was established.  The trustees were Mr Edmunds and his wife.  On 8 October 1980 Smoothpool Nominees Pty Ltd (“Smoothpool”) was appointed trustee of the family trust in place of Mr and Mrs Edmunds.

12. On 21 October 1980 Mr G Pickering and Smoothpool executed a deed of trust in anticipation of Mr Pickering entering into an agreement to purchase the abalone authority owned by Fox.  Mr Pickering agreed to purchase the abalone authority on trust for Smoothpool.  Smoothpool was to pay Mr Pickering an amount equal to the purchase price of the abalone authority as well as other monies.  On 22 August 1980 Mr Pickering purchased the abalone authority.  By reason of the deed executed on 21 October 1980, Mr Pickering held the abalone authority on trust for Smoothpool.  Some two years later, by deed dated 25 October 1982, Smoothpool sold the abalone authority to Mr Pickering.  That sale was the subject of the action heard by Lander J.

13. At some time between 25 October 1982 and 1 July 1983, Dadeeton was appointed trustee of the Cliff Edmunds Family Trust in place of Smoothpool.

14. In the action tried by Lander J, the sale by Smoothpool to Mr Pickering was challenged on the ground that Mr Pickering had acted in breach of trust by purchasing as trustee an asset of the trust, namely, the abalone authority at a price less than its fair value.  Lander J upheld that contention and set aside the purchase.  His Honour also found that the beneficiary of the trust did not give an effective consent.  He held that, while the deed dated 25 October 1982 was in force, Mr Pickering held the legal interest in the abalone authority. 

15. To remedy the breach, Lander J made an order that Mr Pickering transfer the authority to Dadeeton.  In order to achieve a substantial restitution between the parties, the order required payment of $514,544 to Mr Pickering.  The relevant parts of the order are in these terms:

    “2It is declared that on 21 October 1980 the defendant Gregory James Pickering became the trustee of Abalone Authority W17 issued by the South Australian Department of Fisheries which he held on trust for Smoothpool Nominees Pty Ltd.

    3Upon payment of the sum of $514,544 by Smoothpool Nominees Pty Ltd to the defendant Mr Gregory Pickering the Deed of Settlement of 25 October 1982 is set aside.

    4Upon compliance by the plaintiff Smoothpool Nominees Pty Ltd with the payment to the defendant in paragraph 3 hereof it is declared:

    4.1   Since a date sometime after 25 October 1982 and before 30 June 1983 Gregory James Pickering has held Abalone Authority W17 issued by the South Australian Department of Fisheries on trust for Dadeeton Pty Ltd.

    4.2   The transfer of the beneficial interest in December 1982 of the Licence and Authority by the defendant Gregory Pickering to Greg Pickering Investments Pty Ltd is void and of no effect.

    5Upon compliance by the plaintiff, Smoothpool Nominees Pty Ltd, with the payment to the defendant in paragraph 3 hereof it is ordered:-

    Gregory James Pickering at his expense in all things:-

    5.1   Execute the following documents to effect the registration of the transfer of the legal interest in Abalone Authority W17 to Dadeeton Pty Ltd:-

    5.1.1          Application to Transfer Abalone Fishery Licence;

    5.1.2          Statutory Declaration;

    5.1.3          Application for Revocation of Registration as Master;

    5.1.4Other documents required by the Director of Fisheries; and

    5.2   Do all such things and provide such information as is necessary to Dadeeton Pty Ltd to effect the registration of the transfer of the legal interest free of encumbrances in Abalone Authority W17 to Dadeeton Pty Ltd, pursuant to Regulation 9 of the Regulations subject to the consent of the Director of Fisheries of the Department of Primary Industries and Resources in the State of South Australia.

    5.3   In the event Gregory James Pickering refuses or neglects to carry out the steps referred to in paragraphs 5.1 and 5.2 herein within fourteen (14) days of any request by Dadeeton Pty Ltd, Dadeeton Pty Ltd be at liberty to deliver such documents to the Registrar of this Court and the Registrar be appointed to execute the documents for and on behalf of the defendant Gregory James Pickering pursuant to Section 13 of the Enforcement of Judgments Act (SA) 1991.”

    Thus, the transfer of the legal interest in the abalone authority was effected by para 5 of the order.  The transfer was made upon compliance with para 4 of the order which was the means by which the judge ordered substantial restitution to Mr Pickering.

16. Shortly stated, the effect of the orders is as follows.  As from 21 October 1980, Mr Pickering became trustee of the abalone authority on behalf of Smoothpool (para 2).  Thus, from 1980 until the transfer to Mr Pickering on 25 October 1982,  Mr Pickering held the legal interest in the abalone authority and Smoothpool held the beneficial interest.  In order to effect restitution, Smoothpool had to pay $514,544 to Mr Pickering (para 3) and, upon payment of that sum, Mr Pickering was to effect a transfer of the legal interest in the abalone authority (para 5).  Upon the payment of $514,544, the two declarations made in para 4 operated.  They were that Mr Pickering held the abalone authority on trust for Dadeeton and the transfer to Mr Pickering on 25 October 1982 was void.  The transfer of the legal interest in the abalone authority was subject to the consent of the Director of Fisheries.  Mr Pickering refused to sign the necessary documents.  By order of this Court, the transfer was executed by the Registrar of this Court.

17. Those are the facts on which the Commissioner assessed the application for transfer of the abalone authority for stamp duty.  For convenience, I will refer to the application for transfer of the abalone authority as “the transfer of the abalone authority”.  In the Commissioner’s view it was a conveyance of property and was assessable either as a conveyance on sale or a conveyance operating as a voluntary disposition inter vivos. An abalone authority is property within the meaning of s 2 of the Stamp Duties Act.  The first issue is whether the transfer of the abalone authority was a conveyance operating as a voluntary disposition inter vivos within the meaning of s 71(3) of the Act. It was common ground on the appeal to this Court that the transfer was not a conveyance for sale.

18. I deal first with the question whether the transfer of the abalone authority was a conveyance operating as a voluntary disposition inter vivos.

    Extended Meaning of “Conveyance”

19. The transfer of the abalone authority was made pursuant to an order of this Court.  According to ordinary usage, the transfer was not, therefore, a conveyance on sale nor was it a conveyance operating as a voluntary disposition inter vivos.  By reason of the Court’s order, the transfer could not be called a voluntary disposition.  However, the ordinary meaning of “conveyance” is extended by the Stamp Duties Act. For present purposes, it is necessary to have regard only to s 60 and s 71 of that Act. Section 60 defines a conveyance for the purposes of the Act in these terms:

    “ ‘conveyance’ includes–

    (a)    every conveyance, assignment, transfer or declaration of trust and every application under the Real Property Act 1886 or the Community Titles Act 1996; and

    (b)    every decree or order of any court, judge or commissioner; and

    (c)     every other application or request of any kind; and

    (d)    every other assurance or instrument of any kind,

    by which or by virtue of which or by the operation of which, whether upon registration or otherwise, or by the issue of a certificate of title in pursuance of which, any real or personal property or any estate or interest in any such property is assured to, or vested in, any person, and ‘to convey’ has a meaning coextensive with the meaning of ‘conveyance’, as extended by this section”.

    Thus, by reason of para (c) of the definition, the application to the Director of Fisheries for the transfer of the abalone authority constituted a conveyance.  The fact that the transfer of the abalone authority was made in consequence of an order of the court did not mean that the application was not a conveyance.  That conclusion is reinforced to some extent by the fact that the definition of “conveyance” includes every decree or order of any court.

20. Section 60 also defines a conveyance on sale.  However, as already noted, it is common ground that the transfer of the abalone authority was not a conveyance on sale.

21. Section 71(3) of the Act deems certain instruments to be conveyances operating as voluntary dispositions inter vivos. When considering s 71(3), it is necessary to have regard also to s 71(4). As at the date of the assessment, s 71(3) and s 71(4) provided:

    “       (3)    For the purposes of this Act, the following instruments shall, subject to this section, be deemed to be conveyances operating as voluntary dispositions inter vivos:

    (a)    an instrument to which subsection (4) applies effecting or acknowledging, evidencing or recording, any of the following transactions:

    (i)     a transfer of property to a person who takes as trustee; or

    (ii)    a declaration of trust; or

    (iii)   the creation of an interest in property subject to a trust; or

    (iv)    a transfer of an interest in property subject to a trust; or

    (v)the surrender or renunciation of an interest in property subject to a trust; or

    (vi)the redemption, cancellation or extinguishment of an interest in property subject to a trust,

    whether or not any consideration is given for the transaction; or

    (b)    an instrument to which paragraph (a) does not apply, being a conveyance that is not chargeable with duty as a conveyance on sale.

    (4)    This subsection applies to any instrument that relates to land, a marketable security or a unit under a unit trust scheme or an interest in land, a marketable security or a unit under a unit trust scheme.”

    Subsection (4) qualifies subsection (3)(a).  That is a consequence of the terms in which subsection (3)(a) is expressed.  It is as if the terms of subsection (4) are incorporated into subsection (3)(a).  However, it is apparent from its terms that subsection (3)(b) is not qualified by subsection (4).

22. Although the abalone authority is property, the transfer of the abalone authority is not an instrument of the kind to which s 71(4) applies. Thus, the transfer of the abalone authority falls outside s 71(3)(a) of the Act but is caught by s 71(3)(b).

23. Mr Walsh QC, who appeared for Dadeeton, submitted that s 71(4) qualified both s 71(3)(a) and s 71(3)(b) of the Act. That, he said, had been decided by the High Court in MSP Nominees Pty Ltd v Commissioner of Stamps (South Australia) (1999) 198 CLR 494 with the consequence that the application to transfer the abalone authority is not an instrument of the kind caught by s 71(4). On that basis, he argued, the transfer of the abalone authority would not be deemed to be a conveyance operating as a voluntary disposition inter vivos. However, Mr Walsh’s contention is not correct as it does not have due regard to the terms of s 71(3)(a) and (b) nor to the terms of s 71(4). Furthermore, in MSP Nominees, the High Court did not have to decide whether s 71(4) qualified s 71(3)(b). The provisions in s 71 which were material to the issues in that case were only s 71(3)(a) and s 71(4).

24. Thus, by reason of s 71(3)(b), the application is deemed to be a conveyance operating as a voluntary disposition inter vivos.  The Commissioner was, therefore, correct in concluding that the transfer of the abalone authority was liable for duty.

    The Value of the Interest Transferred

25. Schedule 2 of the Act charges duty on a conveyance operating as a voluntary disposition inter vivos on an ad valorem basis. It is necessary, therefore, to determine the value of the interest transferred. The appellant contends that the effect of the order of Lander J is that the only interest of Mr Pickering which was transferred in consequence of the application to the Director of Fisheries was the legal interest and that was of little or negligible value. A number of arguments were addressed on the question when Dadeeton in fact acquired the beneficial interest in the abalone authority, on the effect of the orders of Lander J, and on the effect and operation of other provisions of the Stamp Duties Act. Given the clear terms of s 71(3)(b) and s 71(10), it is unnecessary to examine those issues. Section 71(10) provides:

    “       (10)  For the purposes of this Act, in determining the value of property transferred by a conveyance operating as a voluntary disposition inter vivos, no regard shall be had to the fact that the person to whom the property is transferred takes or is to hold the property subject to a trust or has a beneficial interest in the property.”

    It is, therefore, unnecessary to distinguish between the value of the legal interest and the value of the beneficial interest. Even if it is assumed that, by reason of paras 2 and 3 of the order of Lander J, only the legal interest was transferred, that does not result in the value of the interest in the abalone authority being any less for stamp duty purposes than its ordinary market value. The value of the abalone authority is its ordinary market value: s 60A of the Act. The Commissioner assessed that value to be $4 million and there is no appeal as to its market value.

26. Section 71(5) lists certain conveyances which are not deemed to be a voluntary disposition inter vivos. The only provision which might apply in the circumstances of this case is s 71(5)(d) which provides that an instrument effecting or evidencing a transfer of property for the purpose of effectuating the retirement of a trustee or the appointment of a new trustee is not deemed to be a conveyance operating as a voluntary disposition inter vivos. For the reasons above, unless the instrument falls within s 71(5)(d), it is liable for duty. I turn to consider the operation of s 71(5)(d).

    Section 71(5)(d)

27. Section 71(5)(d) of the Stamp Duties Act is in these terms:

    “       (5)    Subject to subsection (6), an instrument effecting or acknowledging, evidencing or recording, any of the following transactions shall be deemed not to be a conveyance operating as a voluntary dispositions inter vivos:  ...

    (d)    a transfer of property for the purpose of effectuating the retirement of a trustee or the appointment of a new trustee, where the Commissioner is satisfied that the transfer is not part of a scheme for conferring a benefit, in relation to the trust property, upon the new trustee or any other person, whether as a beneficiary or otherwise, to the detriment of the beneficial interest of any person.”

    The first question is whether the application is a transfer of property for the purpose of effectuating the retirement of a trustee or appointment of a new trustee.  For the reasons already given, the application to transfer the abalone authority is a conveyance inter vivos. It is plainly a transfer of property and there was no dispute on that question. It was also common ground that the transfer was not part of a scheme within the meaning of the latter part of s 71(5)(d).

28. It is necessary to determine the meaning of the word “retirement” in s 71(5)(d). In this context, retirement, I think, is not intended to be limited to those occasions where a trustee voluntarily retires from the office of trustee. In ordinary usage, “retirement” has a number of shades of meaning. It denotes, among other things, withdrawal from an office or occupation, or being withdrawn from an office or occupation: see Oxford English Dictionary.  It therefore includes removal from an office or occupation: see Macquarie Dictionary.  It was held in Re Stoneham Settlement Trusts [1953] Ch 59 that a trustee who has been removed against will is not a “retiring trustee” within the meaning of s 36(8) of the Trustee Act 1925 (UK). However, the decision is plainly distinguishable in that the purpose and effect of s 36(8) of the United Kingdom Act is quite different from that of s 71(5)(d). Plainly, the meaning of “retirement” may vary according to the purpose and intent of each statutory provision. In my view, “retirement” in s 71(5)(d) includes both voluntary and involuntary retirement, that is to say, it includes retirement and removal from the office of trustee. That meaning accords with the spirit and intent of s 71(5)(d). The act of retirement and removal has the same consequence, namely, that the trustee no longer acts as trustee. If the exemption did not apply in the case of removal as well as in the case of retirement of a trustee, the intended operation of s 71(5)(d) would be significantly curtailed.

1. It is a fundamental principle of the law relating to stamp duties that duty is levied on instruments, not on the underlying transaction to which they give effect: s 4 of the Stamp Duties Act and DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (New South Wales) (1982) 149 CLR 431 at 449, approved in Commissioner of State Revenue (Victoria) v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651 at 663. However, s 71(5) is a provision deeming the instruments there listed not to be a conveyance inter vivos. Section 71(5)(d) requires regard to be had to the purpose of the transfer of property effected by the conveyance. To that extent it is necessary to have regard to the underlying transaction.

2. For present purposes, the effect of the relevant orders made by Lander J was that, upon payment by Smoothpool of $514,544,

   •       the transfer of the abalone authority by Mr Pickering made on 25 October 1982 was set aside and it was declared that Mr Pickering held the authority on trust for Dadeeton, and

   •       Mr Pickering was ordered to transfer the abalone authority to Dadeeton.

   Although there is no order which removed Mr Pickering as trustee, the transfer of the abalone authority was plainly ordered for the purpose of removing him as trustee.  As Lander J himself noted, the effect of setting aside the transfer of the abalone authority to Mr Pickering on 25 October 1982 was that Mr Pickering would continue to hold the abalone authority on trust for Smoothpool: see paragraph 32 of the reasons delivered on 10 August 2000.  However, given the breaches of trust by Mr Pickering, it was plainly necessary to remove him as trustee.  Instead of making an order to that effect, Lander J has ordered that Mr Pickering transfer the legal interest in the abalone authority to Dadeeton.  In consequence of the transfer Mr Pickering no longer had any interest in the abalone authority and was, in effect, removed as trustee.  It is implicit in the reasons of Lander J, that one purpose of the transfer was to remove Mr Pickering as trustee.  Had it not been intended to remove him as trustee, it would not have been necessary to order the transfer.

3. Section 71(5)(d) does not require that the transfer of property be made solely for the purpose of effectuating the retirement of a trustee. In my view, it is sufficient if that is one of the purposes. As that was one of the purposes of the transfer of the abalone authority the transfer falls within s 71(5)(d).

4. The Solicitor‑General contended that the transfer of the legal interest in the abalone authority merged the legal and beneficial interests in the abalone authority with the consequence that the trust was dissolved.  A person cannot be a trustee for himself alone: DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (New South Wales) (supra) at 442, 463, 473 ‑ 474. However, it was never intended that the legal and beneficial interest in the abalone authority should merge in Dadeeton and that has not occurred. As the reasons of Lander J made clear, once the abalone authority was transferred to Dadeeton, it held the authority on trust for the Edmunds Family Trust. His purpose was to restore the abalone authority to Dadeeton, knowing that it was subject to the trusts of the Edmunds Family Trust. The whole object and purpose of the proceedings was to set aside dealings by a trustee who had acted in breach of trust and transfer the abalone authority to a trust who would comply with the terms of the Edmunds Family Trust. The transfer, therefore, fell within s 71(5)(d).

5. The same result may be achieved by another route. If the transfer was not made for the purpose of removing Mr Pickering as trustee, it was made for the purpose of effectuating the appointment of Dadeeton as trustee of the abalone authority. Instead of permitting Mr Pickering to remain trustee of the abalone authority, Lander J has ordered the transfer of the abalone authority to Dadeeton in the knowledge that Dadeeton is the trustee of the Edmunds Family Trust. That too is apparent from a reading of His Honour’s reasons. Expressed another way, instead of Mr Pickering being trustee, Dadeeton is in consequence of the transfer the new trustee of the abalone authority. The transfer of the abalone authority is for the purpose, among others, of replacing one trustee with another. It is plain that the transfer of the abalone authority is not part of a scheme conferring a benefit in relation to the authority upon any person to the detriment of the beneficiary. It therefore falls within sub-section (5)(d) of s 71.

   The Operation of s 71(6)

6. There is a further matter to consider. The operation of s 71(5) is subject to the terms of s 71(6) which provides:

   “       (6)    Subsection (5) does not apply in relation to a transfer of property or a beneficial interest in property to a person who has, prior to the transfer, a beneficial interest in the property but who takes the property or interest transferred to him as trustee under a further trust.”

   The effect of s 71(6) is that Dadeeton will not be exempted by s 71(5)(d) if, before the transfer, it already had a beneficial interest in the abalone authority and took the interest transferred to it under a further trust. Both limbs of that condition must be satisfied.

7. For the reasons which follow, Dadeeton did not have a beneficial interest in the abalone authority before the transfer.  Smoothpool had a beneficial interest upon the execution of the deed of trust on 21 October 1980.  It lost that beneficial interest when it transferred the abalone authority to Mr Pickering on 25 October 1982.  Mr Pickering held the legal and beneficial interests in the abalone authority until Smoothpool paid Mr Pickering the sum of $514,544 and the order of Lander J took effect.  Not until that payment was made was the sale of the abalone authority to Mr Pickering on 25 October 1982 set aside.  If Smoothpool had not paid that sum, the legal and beneficial interest in the abalone authority would have remained in Mr Pickering.  Upon the payment by Smoothpool of the sum of $514,544 and upon the transfer of the authority the legal and beneficial interest passed for the first time to Dadeeton.  Dadeeton did not, therefore, have a beneficial interest in the abalone authority before the transfer to it.

8. In reaching this conclusion, I have not disregarded the terms of the order of Lander J and in particular the terms of para 4.1 of that order which provide that, upon the payment of $514,544 by Smoothpool, there will be a declaration that Mr Pickering held the abalone authority on trust for Dadeeton since a date at some time after 25 October 1982 and before 30 January 1983.  It must be remembered that Lander J had to spell out all the steps necessary to achieve the intended result.  Plainly, Smoothpool did not intend to pay Mr Pickering the sum of $514,544 unless and until Mr Pickering transferred the abalone authority to Dadeeton and the consent to the transfer had been obtained from the Director of Fisheries.  Equally, Mr Pickering would not wish to transfer the abalone authority until payment.  The rights and liabilities of each Mr Pickering and Dadeeton were correlative.  Thus, it was intended that the transfer of the legal and beneficial interest to Dadeeton should occur at the same instant as the payment of $514,544.  Thus, Dadeeton did not hold a beneficial interest in the abalone authority until it was transferred to it.  On any view, Dadeeton did not hold a beneficial interest in the authority before the transfer.  That declaration only operated once the payment had been made by Smoothpool.  Paragraph 4.1 of the order is a deeming provision which operates only after the payment has been made and in this case the payment was made at the same instant as the transfer.

9. Furthermore, the application for consent to the transfer of the abalone authority shows that payment was to be made upon the Director of Fisheries consenting to the transfer. The sequence of events was intended to be that, once the Director had granted his consent, Smoothpool would pay the sum of $514,544 and Mr Pickering would transfer the abalone authority. The beneficial interest in Dadeeton was created in the same instant as the transfer of the abalone authority. In other words, Dadeeton acquired both the legal and beneficial interest at the same time with the consequence that the transaction did not fall within s 71(6).

10. It appears that Mr Pickering did not comply with the order.  He refused to execute the transfer.  On 6 December 2000 the solicitors for Smoothpool delivered to the solicitors for Mr Pickering a cheque for $514,544 together with the application for transfer of the abalone authority for execution by Mr Pickering.  The cheque was paid into the trust account of Mr Pickering’s solicitor.  On the same day, on the application of Dadeeton and others, Lander J ordered that Mr Pickering or his agents be restrained from dealing in any way with the proceeds of the cheque until 7 December.  On 7 December the operation of the order was extended until 11 December.  On 11 December Mr Pickering and his solicitors gave an undertaking to the Court they would not deal with the proceeds of the cheque until released from their undertaking.  The only reasonable inference is that Mr Pickering and his solicitors were not released from the undertaking until the consent of the Director of Fisheries to the transfer had been obtained.  Mr Pickering still refused to execute the transfer.  On 21 December 2000 the application for transfer of the licence was executed on behalf of Mr Pickering by the Registrar of this Court pursuant to the terms of paragraph 5.3 of the order made by Lander J.  Thereafter the payment was made.  None of those facts alter the effect of the conclusion above.

11. This conclusion accords with the spirit and intent of s 71(6) which is intended to prevent schemes to avoid the payment of duty on the transfer of property. In this case there is no scheme. The transfer of the abalone authority was made for no other purpose than to remedy a breach of trust and was made pursuant to orders of this Court. It would be manifestly unfair if Dadeeton was required to pay stamp duty on the transfer of the abalone authority by Mr Pickering to Dadeeton, as that was an instrument created for the purpose only of giving effect to the orders of this Court.

12. For all of these reasons, the transfer falls within s 71(5)(d) and is not caught by s 71(6). It follows that the appeal must be allowed. There should be orders providing for repayment to Dadeeton of an amount equal to the stamp duty paid by it together with interest thereon calculated pursuant to s 99 of the Taxation Administration Act.

    GRAY J.

    Introduction

13. An application to transfer abalone fishery licence W17 (the application) from Gregory James Pickering to Dadeeton Pty Ltd was submitted by Dadeeton for assessment of duty pursuant to the Stamp Duties Act 1923 (SA). A copy of a sealed order of this court dated 10 August 2000 directing the transfer was attached to the application. The order was made following a trial before a judge of this court (the trial judge). The order provided that the abalone fishery licence (the licence) was to be transferred once specified conditions were satisfied. The specified conditions were met. On 21 December 2000 the Registrar of the Supreme Court signed the transfer application on behalf of Mr Pickering.

14. On 1 March 2001 the Commissioner of State Taxation assessed stamp duty on the transfer at $191,330.00.  When valuing the licence at $4,000,000.00 the Commissioner had regard to both the legal and beneficial interests in the licence.

15. Dadeeton contended that the value of the beneficial interest in the licence should not have been taken into account when the Commissioner assessed the duty payable on the instrument of transfer.  It was submitted that the duty should have been assessed by reference to the transfer of the legal interest only.  It was said that this value was negligible.

16. This is an appeal against the decision of a judge of this court to dismiss an appeal against an assessment of stamp duty. The ultimate question is whether ad valorem stamp duty is payable on the application to transfer the licence pursuant to the terms of the court order.

17. The determination of this appeal requires an understanding of the circumstances which led the trial judge to direct that the licence be transferred from Mr Pickering to Dadeeton.  The detailed history is set out in the trial judge’s reasons in Edmunds v Pickering (No 3). [1]  Supplementary reasons addressing the terms of the final orders are reported as Edmunds v Pickering(No 4).[2]  The reasons of the Full Court dismissing an appeal from the trial judge’s decision are reported as Pickering v Smoothpool Nominees.[3]

    [1] (1999) 75 SASR 407

    [2] (2000) 77 SASR 381

    [3] (2001) 81 SASR 175

18. The relevant history included the following:

    -       Smoothpool Nominees Pty Ltd was the trustee of the Cliff Edmunds family trust

    -       On 21 October 1980 a deed was entered into whereby Mr Pickering agreed to hold the licence on trust for Smoothpool.  Later Dadeeton replaced Smoothpool as trustee

    -       As a result of concerns about the legality of the October 1980 deed a further deed was entered into on 25 October 1982

    -       The effect of the October 1982 deed was described by the trial judge:[4]

    [4] Edmunds v Pickering (No 3) (1999) 75 SASR 407 at 530-531

    By the deed the parties agreed to substitute the terms of that deed in lieu of and in substitution for all previous deeds and agreements between the parties and agreed that the substitution of those terms should be effective from 20 June 1982.

    …

    The effect of the transaction was that Smoothpool Nominees Pty Ltd transferred its beneficial interest in the trust property to Mr Gregory Pickering who by virtue of the deed of trust of 21 October 1980 already held the legal interest.  As a result of the transaction, Mr Gregory Pickering became absolutely entitled to the licence which previously had been subject to the trust of which he was the trustee.

    -       Subsequent proceedings were taken by Smoothpool to set aside the October 1982 deed. 

    -       In those proceedings the trial judge:

    -       found that Mr Pickering had acted in breach of trust as the result of an ongoing course of conduct between June 1982 and October 1982 and thereafter.

    -       concluded that Mr Pickering had acted in breach of trust by his:

    -       rejection of the trust;

    -       rejection of his duties as a trustee;

    -       deliberate placing of undue pressure to encourage a sale of the trust property;

    -       failure to make proper disclosure about matters concerning the value of the trust property;

    -       purchase of the trust property for less than fair value; and

    -       failure to account for the use of the trust property.

    -       rejected the defences of illegality, acquiescence and laches.

    -concluded that the trust property should be restored and an account taken.

19. The trial judge made orders and declarations inter alia as follows:

    2.It is declared that on 21 October 1980 the defendant, Gregory James Pickering, became the trustee of Abalone Authority W17 issued by the South Australian Department of Fisheries which be held on trust for Smoothpool Nominees Pty Ltd.

    3.Upon payment of the sum of $514,544 by Smoothpool Nominees Pty Ltd to the defendant Mr Gregory Pickering the Deed of Settlement of 25 October 1982 is set aside.

    4.Upon compliance by the plaintiff, Smoothpool Nominees Pty Ltd. with the payment to the defendant in paragraph 3 hereof it is declared:

    4.1     Since a date sometime after 25 October 1982 and before 30 June 1983 Gregory James Pickering has held Abalone Authority W17 issued by the South Australian Department of Fisheries on trust for Dadeeton Pty Ltd.

    4.2   The transfer of the beneficial interest in December 1992 of the Licence and Authority by the defendant Gregory Pickering to Greg Pickering Investments Pty Ltd is void and of no effect.

    …

    The judgment of the trial judge was upheld on appeal.[5]

    [5] Pickering v Smoothpool  Nominees (2001) 81 SASR 175

20. The transfer of the legal interest in the licence from Mr Pickering to Dadeeton was to be effected pursuant to paragraph 5 of the order which inter alia provided:

    5.Upon compliance by the plaintiff, Smoothpool Nominees Pty Ltd, with the payment to the defendant in paragraph 3 hereof it is ordered:-

    Gregory James Pickering at his expense in all things:

    5.1     Execute the following documents to effect the registration of the transfer of the legal interest in Abalone Authority W17 to Dadeeton Pty Ltd:

    5.1.1Application to transfer Abalone Fishery Licence;

    5.1.2Statutory Declaration;

    5.1.3Application for Revocation of Registration as Master;

    5.1.4Other documents required by the Director of Fisheries;…”.

21. It is to be observed that the trust the subject of the declaration in paragraph 4 of the order of the trial judge was the trust imposed on Mr Pickering by the October 1980 deed.  The trial judge reasoned:[6]

    … the setting aside of the deed of settlement [the October 1982 deed] means that the deed of trust [the October 1980 deed] would continue to operate.  The parties to the transaction would be put back to the position they would have been in had the transaction ever occurred.  No order would be necessary to revive the operation of the deed of trust [the October 1980 deed].  It would continue to operate by its own terms.

    [6] Edmunds & Ors v Pickering & Ors (No 4) [2000] SASC 267 at [32]

22. As earlier observed the trial judge made orders requiring Mr Pickering to do such things as were necessary to transfer the licence to Dadeeton including the execution of the application and transfer of the licence.  The trial judge explained the purpose of these orders as follows: [7]

    It seems to me it would be appropriate to make such orders so as to unite the legal and equitable interests in the Abalone authority.  Mr Pickering has his legal interests, as I have explained, because of the provisions of the deed of trust.  Dadeeton Pty Ltd has its equitable interest because that equitable interest was assigned to it by Smoothpool Nominees Pty Ltd by the deed of appointment of new trustee of 1 July 1982.

    …

    … [T]hat is not to say they have consented to those orders and declarations, but if the transaction of 25 October 1982 was reversed then I do not think it was argued that it would be inappropriate to effectively dissolve the trust by merging the legal and equitable interests. (emphasis added)

    [7] Edmunds & Ors v Pickering & Ors (No 4) [2000] SASC 267 at [97] – [100]

    The Legislation

23. Section 60A (4b) of the Stamp Duties Act provides:

    Where an estate or interest conveyed or transferred merges with an estate or interest already held by the transferee (the latter having been acquired by the transferee on or after 7 January 1997), the Commissioner may, for the purposes of assessing the duty payable on the conveyance, treat the value of the estate or interest conveyed or transferred as being—

    (a)where the instrument creating the estate or interest already held was charged with ad valorem duty as a conveyance—the value of the estate or interest produced by the merger less the value of the estate or interest already held; or

    (b)     in any other case—the value of the estate or interest produced by the merger.

    This provision enables the Commissioner to treat the value of the legal interest in the licence pursuant to a transfer application as being the value of the estate or interests produced by a merger of that legal interest with the beneficial interest. 

24. Section 71 of the Stamp Duties Act relevantly provides:

    (3) For the purposes of this Act, the following instruments shall, subject to this section, be deemed to be conveyances operating as voluntary dispositions inter vivos:

    (a)     an instrument to which subsection (4) applies effecting or acknowledging, evidencing or recording, any of the following transactions:

    (i)    a transfer of property to a person who takes as trustee; or

    (ii)    a declaration of trust; or

    (iii)     the creation of an interest in property subject to a trust; or

    (iv)     a transfer of an interest in property subject to a trust; or

    (v)the surrender or renunciation of an interest in property subject to a trust; or

    (vi)     the redemption, cancellation or extinguishment of an interest in property subject to a trust,

    whether or not any consideration is given for the transaction; or

    (b)     an instrument to which paragraph (a) does not apply, being a conveyance that is not chargeable with duty as a conveyance on sale.

    (4) This subsection applies to any instrument that relates to land, a financial product or a unit under a unit trust scheme, or an interest in land, a financial product or a unit under a unit trust scheme.

    (10) For the purposes of this Act, in determining the value of property transferred by a conveyance operating as a voluntary disposition inter vivos, no regard shall be had to the fact that the person to whom the property is transferred takes or is to hold the property subject to a trust or has a beneficial interest in the property.

    The Stamp Duty Appeal

1. The single judge dismissed Dadeeton’s appeal against the assessment of duty.  He concluded that the trial judge’s orders and declarations had the following effect:

   …upon payment by Smoothpool of the amount stated in par 3 of the order, the Deed of October 1982 is set aside;  accordingly, the beneficial interest in the licence reverts to Dadeeton as trustee (the licence now being held by Pickering on trust for Dadeeton);  the declaration in par 4 comes into effect, and Pickering is also required to transfer the legal interest in the licence.  The transfer of the legal interest is subject to the consent of the Director.

   The single judge then reasoned:

   In light of the above, I conclude that the beneficial interest in the licence passed from Pickering to Dadeeton, and vested in Dadeeton, by virtue of par 3 of the order, upon payment by Smoothpool of the amount specified.

   I conclude that the legal interest in the licence passed from Pickering to Dadeeton and vested in Dadeeton by virtue of the application, once the Director had consented to it, although I recognise that par 5 of the order is the source of the obligation on Pickering to transfer the legal interest.

   The [Stamp Duties Act] imposes a duty on instruments, not on transactions.  The two instruments submitted to the Commission together disposed of the entire interest in the licence.  But for the purposes of the [Stamp Duties Act] it is necessary to identify the interest in property that is conveyed or transferred by the application, because duty is assessed by reference to the value of that property;  Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd [2002] HCA 43 at [34].

   …

   The application, (and, for that matter, the order) may well be a conveyance on sale.  It is not necessary to decide that question.  It is not necessary to decide that because, as will appear, the outcome of the appeal is the same whether the application is to be regarded as a conveyance on sale or as a conveyance operating as a voluntary disposition inter vivos.

2. Having concluded that the beneficial interest passed to Dadeeton on the making of the payment referred to in paragraph 3 of the trial judge’s order the single judge then addressed section 60A(4b) of the Stamp Duties Act:

   [Section 60A(4b)] enables the Commissioner to treat the value of the legal interest in the licence that passes under the application as its market value.  The Commissioner is able to do so because upon the transfer of the legal interest it merges with the beneficial interest held by Dadeeton under and by virtue of par 3 of the order, leaving Dadeeton as the holder of the licence simpliciter, although of course as trustee of a family trust.  The case does not fall within sub-par (a) because the instrument creating the interest already held by Dadeeton, the order, has not been charged with ad valorem duty.  Accordingly, under sub-par (b), the Commissioner is entitled to treat the value of the legal interest transferred as being the value of the licence, and that means the market value.

   The single judge further reasoned:

   The Commissioner submits that the better view is that the application is to be regarded as a conveyance operating as a voluntary disposition inter vivos. The Commissioner relies upon s 71(3)(b), which deems “an instrument to which paragraph (a) does not apply, being a conveyance that is not chargeable with duty as a conveyance on sale” to be a conveyance operating as a voluntary disposition inter vivos. The application does not fall within par (a). Dadeeton also submits that the application is such a conveyance, but relies upon s 71(5)(d) and (e) of the SDA to take the application outside s 71. The Commissioner denies that Dadeeton can rely on s 71(5).

   The single judge then considered the operation of section 71(5)(d) of the Stamp Duties Act and concluded:

   I consider that the application does not fall within s 71(5)(d). The application is unrelated to the replacement of Smoothpool by Dadeeton as trustee, except that that event explains why the application identifies Dadeeton as transferee. In my opinion this provision of the SDA requires consideration of the purpose of the application in the sense of the object it seeks to achieve. In some cases that may require the selection of a predominant object, but that is not something that I have to decide here. The object of the application is to complete the process of rescinding the transfer of the beneficial interest in the licence to Pickering effected by the Deed of October 1982. The object is also to dissolve the trust created by the Deed of October 1980, in order to restore the licence wholly to the trustee of the family trust. Even if Smoothpool were still the trustee of that family trust, the legal interest in the licence would have been subject to an order requiring Pickering to dispose of it.

   Putting things differently, the application is not necessary or appropriate because Dadeeton has replaced Smoothpool.  It is necessary and appropriate because the trust arising from the Deed of October 1980 is to be dissolved, in the context of Pickering being deprived of the beneficial interest that he acquired under the Deed of October 1982.

   Dadeeton is not entitled to rely on s 71(5)(d).

   The Appeal to this Court

3. Counsel for Dadeeton accepted the single judge’s conclusion that the transfer application related only to the transfer of the legal interest in the licence.  It was submitted that the effect of the trial judge’s orders and declarations was to render the 1982 deed void ab initio and of no effect.  It was contended that the declarations treated the beneficial interest in the licence as though it had been “revested in the innocent party from the beginning”.  It was said that the real value in the licence lay in its beneficial interest not in the legal interest. 

4. Counsel for Dadeeton claimed that the Commissioner’s assessment had proceeded on an incorrect basis. The application of section 60A(4b) of the Stamp Duties Act was challenged.  It was argued that as the beneficial interest had been acquired by Dadeeton (or its predecessor Smoothpool) on a date before 7 January 1997 the section could have no operation.  It was submitted that as error had been identified the matter should be remitted to the Commissioner to re-assess duty on the basis that only the legal interest in the licence was to be valued.

5. Counsel for Dadeeton further argued that the application for transfer was deemed not to be a conveyance operating as a voluntary disposition inter vivos by reason of section 71(5)(d) of the Stamp Duties Act.  It was said that the transfer from Mr Pickering to Dadeeton was for the purpose of effectuating the appointment of Dadeeton as a new trustee.

6. Counsel for the Commissioner submitted that the trial judge’s orders and declarations recognised that until the conditions precedent to the transfer order were met the beneficial interest in the licence remained with the Pickering interests pursuant to the 1982 deed. Once the conditions were satisfied the beneficial interest was then deemed to be held by Dadeeton (or its predecessor Smoothpool) with retrospective effect. It was submitted that the deeming order was designed to allow an effective remedy to be granted. However until the conditions were satisfied the beneficial interest remained with the Pickering interests. It was submitted that the judge was correct to conclude that section 60A(4b) of the Stamp Duties Act applied.

7. Counsel for the Commissioner further contended that the transfer of the licence was a conveyance inter vivos by reason of section 71(3)(b) of the Stamp Duties Act. Reliance was placed on section 71(10) to support the Commissioner’s position that duty had been correctly assessed.

8. Counsel submitted that the single judge’s rejection of the argument based on section 71(5)(d) of the Stamp Duties Act was correct. It was said that the relevant trust addressed by section 71(5)(d) was the trust created by the 21 October 1980 deed. It was said that the purpose of the transfer of the legal interest was to effectively dissolve the trust by merging the legal and equitable interests. It was further contended that none of the provisions of section 71(5) applied in relation to the transfer by reason of the provisions of section 71(6) of the Stamp Duties Act.

   Consideration of the Appeal

9. Stamp duty is levied on instruments not on the underlying transactions to which they give effect.[8]  In DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) Mason J observed:

   It is a fundamental principle of the law relating to stamp duties that duty is levied on instruments, not on the underlying transactions to which they give effect ... [I]n the case of a conveyance the statutory command is that it attracts duty on the property conveyed; in the case of the declaration it attracts duty on 'the property comprised therein'.  Consequently the issues are:  (1) What was the property conveyed by the transfer?; and (2) What was the property comprised in the declaration?  The decision on these issues hinges on the interpretation of the two instruments, that is, on the description given by them of the relevant estate or interest as applied to the facts of the case.  It is a matter of ascertaining what is the property with which each instrument deals, according to its terms.

   We cannot substitute for the issues preserved by the statute a different issue having no foundation in the statutory provisions.  Nor can we substitute for the property which the parties have chosen by their instruments to convey and make the subject of a declaration of trust the interest in property which in a practical sense represents the alteration in [the transferor's] position brought about by the combined operation of the two instruments[9].

   [8] Section 4 of the Stamp Duties Act. “Instrument” is defined in section 2 of the Act to include every written document.

   [9] (1981-1982) 149 CLR 431 at 449. This statement was recently approved in Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651

10. In Commissioner for State Revenue v Pioneer Concrete(Vic) Pty Ltd[10] the High Court observed that stamp duty liability arises because an instrument transfers an estate or an interest in property and it is by reference to the value of the estate or interest that is transferred that duty is assessed and imposed.

    [10] (2002) 209 CLR 651

11. Evidence may be used to determine the real nature of a transaction to which an instrument relates.  In Commissioner of Stamp Duties (Qld) v Hopkins[11] Latham CJ observed:

    ...in many cases the courts have heard extrinsic evidence in order to determine the real nature of the transaction to which the instrument relates and to ascertain the amount of duty payable... It is true that, as has often been said, the Stamp Duty Acts impose duties upon instruments and not upon transactions. It is obvious that you can stick a stamp or impress a stamp upon an instrument, but not upon a transaction. But, in order to determine whether an instrument is dutiable, it is nevertheless necessary to ascertain the legal operation of the instrument, i.e., to determine the nature of the transaction which it accomplishes. Thus, for example, if a person purported to make a conveyance or settlement of land in which he had no interest whatever, the instrument would not be dutiable as a conveyance or settlement, because it would not produce any legal effect whatever in relation to the property with which it purported to deal. ...

    In the first place, I consider the instrument in itself independently of any extrinsic evidence and ask what would be the legal operation of the instrument if fully executed. The instrument recites an intention of the father to transfer certain property to the son to be held by him upon the trusts mentioned therein. It does not contain any agreement (either with the son or with the proposed beneficiaries) to settle the property, but only states an intention to do so. If the father had changed his mind and had refused or merely failed to transfer the property to the son, neither the son nor the proposed beneficiaries (who were volunteers) could have compelled him to do so. It is a common practice for an intending settlor to execute a deed containing or referring to an agreement to settle property owned by him and declaring the intended trusts thereof, the property to be transferred upon or immediately after the execution of the deed: ... Such a document does not itself settle any property, but, as an agreement to settle property, it would be a settlement within the meaning of the Act. The instrument now in question cannot be brought within the Act as being an agreement to settle property.

    Further, the document itself does not transfer any property to any person. It does not itself affect the right or title of any person to any property. The document states that the father, described as the settlor, declares that the son shall hold the property upon certain trusts, but it does not in itself (i.e. apart from the extrinsic fact of transfer of the property) give any rights to any person in respect of the property.

    [11] (1945-46) 71 CLR 351 at 360-361 see also Rich J at 369 and Dixon J at 378

12. The single judge was correct to observe that:

    …the application refers simply to the licence, it is accompanied by the court order which showed how Dadeeton was able to affect the transfer to itself, and further shows that beneficial interest in the licence passes upon the making of the payment in par 3 of the order. 

    It was appropriate to look beyond the instrument of conveyance (the application) to identify the property transferred and the legal effect of the instruments.

    When did Dadeeton acquire the beneficial interest?

13. As earlier observed the trial judge concluded that following the entry into the October 1982 deed the Pickering interests held both the legal and beneficial interests in the licence.  This continued until the trial judge’s declaration took effect.  This did not occur until payment was made by Dadeeton pursuant to the trial judge’s order.

14. It does not follow from the setting aside of the October 1982 deed that it was void ab initio and of no effect.  The October 1982 deed had been entered into and had taken effect.  This was specifically recognised in the trial judge’s reasons in the passage referred to earlier.  The October 1982 deed was voidable not void.

15. When a voidable transaction is set aside or avoided in equity the court may require that the setting aside have retrospective effect. Retrospectivity may operate in a limited way.  Much will depend on the circumstances and the terms of the particular order. 

16. In the present case the trial judge made his declarations and orders in materially different terms.  In paragraph 3 the trial judge declared that “upon payment of the sum of $514,544 by Smoothpool Pty Ltd to … Mr Pickering the deed of settlement of 25 October 1982 is set aside”.  The later declaration in paragraph 4.2 of the trial judge’s order addressed the transfer of the beneficial interest of the licence in December 1992 to Gregory Pickering Investments. The trial judge declared that transfer to be “void and of no effect”.

17. The differences in the terms of the declarations are significant.  They demonstrate that the trial judge did not intend that the setting aside the October 1982 deed would render it void and of no effect.  Paragraph 3 of the trial judge’s order accorded with his earlier finding that the October 1982 deed had legal effect.

18. The submission of counsel for Dadeeton that the declaration rendered the October 1982 deed void and of no effect should be rejected. The trial judge’s orders and declarations were designed to facilitate equitable relief. The consequence of those orders and declarations was that Dadeeton acquired the beneficial interest in early 2001. The time of this acquisition was after 7 January 1997. Section 60A(4b) applied. The Commissioner correctly assessed stamp duty.

    Was the transfer application a conveyance inter vivos?

19. Counsel for the Commissioner submitted that the transfer of the licence pursuant to the trial judge’s order was a conveyance of property operating as a voluntary disposition inter vivos. This submission formed the basis of a notice of alternative contention. It was argued that pursuant to section 71(3)(b) of the Stamp Duties Act the application to transfer was an instrument deemed to be a conveyance operating as a voluntary disposition inter vivos. It was then contended that section 71(10) applied. When determining the value of the property transferred the Commissioner was correct not to have regard to the fact that Dadeeton already held a beneficial interest in the property.

20. Counsel for Dadeeton submitted that the transfer application was not a conveyance operating as a voluntary disposition inter vivos. It was said that section 71(4) qualified sections 71(3)(a) and 71(3)(b) of the Stamp Duties Act. It was argued that the instrument in the present case did not relate to property within the meaning of section 71(4). The deeming provision had no application. The High Court’s reasoning in MSP Nominees Pty Ltd v The Commissioner of Stamps (SA)[12] was said to apply.

    [12] (1999) 198 CLR 494

21. Section 71(3)(b) was a re-enactment of section 71(3) as it was before the inclusion of sub paragraph 71(3)(a) in 1980. Prior to that amendment section 71(3) deemed conveyances which were not conveyances upon sale to be conveyances operating as voluntary dispositions. There is no discernable reason why the legislature would have impliedly limited the reach of the deeming provision when it was re-enacted as section 71(3)(b).

22. Section 71(4) does not purport to qualify or limit the operation of section 71(3)(b). Section 71(3)(a) specifically relates to an instrument to which section 71(4) applies. Section 71(3)(b) is not so qualified. This submission of counsel for Dadeeton should be rejected.

23. Section 71(10) has application in the present case. Once it is accepted that the instrument of transfer operated as a voluntary disposition inter vivos no regard was to be had to the fact that the transferee Dadeeton already held a beneficial interest in the property.  The Commissioner was correct in valuing the licence by reference to both the legal and beneficial interests held by Dadeeton.

24. As earlier observed counsel for Dadeeton challenged the single judge’s decision that section 71(5)(d) of the Stamp Duties Act did not apply. Section 71(5)(d) of the Act provides:

    (5)     Subject to subsection (6), an instrument effecting or acknowledging, evidencing or recording, any of the following transactions shall be deemed not to be a conveyance operating as a voluntary disposition inter vivos:

    …

    (d) a transfer of property for the purpose of effectuating the retirement of a trustee or the appointment of a new trustee, where the Commissioner is satisfied that the transfer is not part of a scheme for conferring a benefit, in relation to the trust property, upon the new trustee or any other person, whether as a beneficiary or otherwise, to the detriment of the beneficial interest of any person.

    Section 71(6) provides:

    Subsection (5) does not apply in relation to a transfer of property or a beneficial interest in property to a person who has, prior to the transfer, a beneficial interest in the property but who takes the property or interest transferred to him as trustee under a further trust.

25. It is important to recall that consideration has to be given to two trusts when discussing the possible application of sections 71(5)(d) and 71(6). Dadeeton held the licence as trustee for the Cliff Edmunds Family Trust. The trial judge declared the 1982 deed void and ordered the transfer of the legal interests to Dadeeton. In that way Dadeeton would hold both the beneficial and legal interests. The legal estate and the beneficial estate would merge. Coincidentally Dadeeton held the merged interest on trust for the Cliff Edmund’s interests.

1. The submission of counsel for Dadeeton concerning section 71(5)(d) should be rejected. The operation of section 71(5)(d) is precluded by the terms of section 71(6). In the present case the intention was to transfer the legal interest in the licence to Dadeeton which prior to the transfer held a beneficial interest in the licence. The effect of the transfer was that Dadeeton took the legal interest in the property as trustee for the Cliff Edmunds Trust. In these circumstances section 71(6) operated to preclude the operation of section 71(5)(d).

2. In any event section 71(5)(d) did not apply to the application to transfer. Section 71(5)(d) addresses the purpose of the transfer. Where the purpose is to effectuate the retirement of the trustee or the appointment of a new trustee in circumstances where the Commissioner is satisfied that the transfer is not part of a scheme to benefit the new trustee to the detriment of the beneficial interest of any person then the instrument affecting the transfer is deemed not to be a conveyance operating as a voluntary disposition inter vivos.

3. As earlier observed the purpose of the transfer in the present case was to give effect to the court’s intention that the legal and beneficial interests in the licence be merged and then transferred to Dadeeton to be held by Dadeeton as trustee for the Cliff Edmunds interests. The object was to dissolve the 1982 trust completely. There was to be no retirement of a trustee or appointment of a new trustee. In these circumstances section 71(5)(d) did not apply.

   Conclusion

4. The beneficial interest in the licence passed from Mr Pickering to Dadeeton when the condition specified in paragraph 3 of the trial judge’s order were satisfied. This occurred when Dadeeton paid the specified amount to Mr Pickering before the application for transfer was signed by the Registrar. Accordingly the Commissioner was correct to value the licence having regard to both the legal and beneficial interests. This course was authorised by section 60A(4b) as well as section 71(10) of the Stamp Duties Act.

5. This appeal should be dismissed.

   JUDGMENT CITATIONS LISTED IN ORDER OF APPEARANCE IN JUDGMENT

   1 (1999) 75 SASR 407

   2 (2000) 77 SASR 381

   3 (2001) 81 SASR 175

   4      Edmunds v Pickering (No 3) (1999) 75 SASR 407 at 530-531

   5      Pickering v Smoothpool  Nominees (2001) 81 SASR 175

   6      Edmunds & Ors v Pickering & Ors (No 4) [2000] SASC 267 at [32]

   7Edmunds & Ors v Pickering & Ors (No 4) [2000] SASC 267 at [32] at [97] – [100]

   8Section 4 of the Stamp Duties Act. “Instrument” is defined in section 2 of the Act to include every written document.

   9(1981-1982) 149 CLR 431 at 449. This statement was recently approved in Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651

   10 (2002) 209 CLR 651

   11 (1945-46) 71 CLR 351 at 360-361 see also Rich J at 369 and Dixon J at 378

   12 (1999) 198 CLR 494